UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
- ----- ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
OR
______ TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NUMBER 0-9385
BULL RUN CORPORATION
(Exact name of registrant as specified in its charter)
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GEORGIA 91-1117599
(State of incorporation (I.R.S. Employer
or organization) Identification No.)
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4370 PEACHTREE ROAD, N.E., ATLANTA, GA 30319
(Address of principal executive offices) (Zip Code)
(404) 266-8333
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 22,090,223 shares of Common
Stock, par value $.01 per share, were outstanding as of April 30, 1998.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BULL RUN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
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March 31, December 31,
1998 1997
---- ----
ASSETS
Current assets:
Cash and cash equivalents............................................ $ 286,520 $ 142,097
Accounts receivable.................................................. 4,600,850 4,599,548
Inventories.......................................................... 5,079,133 3,757,437
Other................................................................ 277,724 193,013
----------- ----------
Total current assets............................................ 10,244,227 8,692,095
Property and equipment, net............................................. 2,866,655 2,637,652
Investment in affiliated companies...................................... 66,308,613 61,550,777
Goodwill................................................................ 7,043,789 3,589,110
Other assets............................................................ 248,166 362,548
----------- ----------
$ 86,711,450 $ 76,832,182
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable and current portion of long-term debt................... $ 2,500,000 $ 2,500,000
Accounts payable..................................................... 2,995,722 2,462,276
Accrued and other liabilities:
Employee compensation and related taxes........................... 495,251 430,397
Interest.......................................................... 611,948 552,720
Other............................................................. 467,442 233,166
---------- -----------
Total current liabilities....................................... 7,070,363 6,178,559
---------- ----------
Long-term debt.......................................................... 50,704,699 41,998,483
---------- ----------
Deferred income taxes................................................... 2,455,653 3,599,267
---------- ----------
Stockholders' equity:
Common stock ($.01 par value, authorized 100,000,000 shares; issued
22,591,727 shares as of March 31, 1998 and 22,582,727 shares
as of December 31, 1997).......................................... 225,917 225,827
Additional paid-in capital........................................... 21,362,985 20,800,566
Retained earnings.................................................... 6,134,638 7,217,650
Treasury stock, at cost (501,504 shares as of
March 31, 1998 and 1,286,510 shares as of
December 31, 1997)................................................ (1,242,805) (3,188,170)
---------- ----------
Total stockholders' equity..................................... 26,480,735 25,055,873
---------- ----------
$ 86,711,450 $ 76,832,182
========== ==========
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See accompanying notes to condensed consolidated financial statements.
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BULL RUN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
(UNAUDITED)
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Three Months Ended
March 31
--------
1998 1997
---- ----
Revenue from printer operations............................................ $ 6,613,545 $ 5,464,744
Cost of goods sold......................................................... 4,969,556 3,936,517
--------- ---------
Gross profit........................................................... 1,643,989 1,528,227
--------- ---------
Consulting fee income...................................................... 2,130 598,281
------------ -------
Operating expenses:
Research and development............................................... 554,535 484,036
Selling, general and administrative.................................... 1,574,055 1,108,984
--------- ---------
2,128,590 1,593,020
--------- ---------
Income (loss) from operations.............................................. (482,471) 533,488
Other income (expense):
Equity in earnings (losses) of affiliated
companies.......................................................... (270,131) (184,455)
Interest and dividend income........................................... 280,624 275,317
Interest expense....................................................... (1,032,206) (591,166)
---------- --------
Income (loss) before income taxes.......................................... (1,504,184) 33,184
Income tax benefit (provision)............................................. 421,172 (13,274)
---------- -------
Net income (loss).......................................................... (1,083,012) 19,910
Retained earnings, beginning of period..................................... 7,217,650 8,990,642
--------- ---------
Retained earnings, end of period........................................... $ 6,134,638 $ 9,010,552
========= =========
Earnings (loss) per share:
Basic.................................................................. $ (.05) $ .00
==== ====
Diluted................................................................ $ (.05) $ .00
==== ====
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See accompanying notes to condensed consolidated financial statements.
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BULL RUN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31
----------------
1998 1997
---- ----
Cash flows from operating activities:
Net income (loss)...................................................... $(1,083,012) $ 19,910
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization..................................... 340,174 237,986
Equity in (earnings) losses of affiliated companies............... 270,131 184,455
Accrued preferred dividend income................................. (75,000) (75,000)
Change in operating assets and liabilities:
Accounts receivable........................................... 301,978 (193,014)
Inventories................................................... (783,275) (17,994)
Other current assets.......................................... (48,794) (86,826)
Accounts payable and accrued expenses......................... 423,531 (465,974)
Deferred income taxes......................................... (412,000) 50,000
---------- --------
Net cash used in operating activities............................. (1,066,267) (346,457)
---------- --------
Cash flows from investing activities:
Capital expenditures................................................... (116,977) (133,757)
Investment in affiliated companies..................................... (4,952,967)
Acquisition of printer manufacturer, net of cash
acquired.......................................................... (1,902,613)
Dividends received from affiliated companies........................... 24,232
----------- --------
Net cash used in investing activities............................. (6,972,557) (109,525)
---------- -------
Cash flows from financing activities:
Borrowings on revolving lines of credit................................ 4,062,000 4,755,000
Repayments on revolving lines of credit................................ (5,370,506) (2,985,000)
Proceeds from long-term debt........................................... 10,014,722
Repayments on long-term debt........................................... (530,844)
Repurchase of common stock............................................. (1,405,894)
Exercise of incentive stock options.................................... 7,875 84,000
------------- -----------
Net cash provided by financing activities......................... 8,183,247 448,106
---------- ----------
Net increase (decrease) in cash and cash equivalents....................... 144,423 (7,876)
Cash and cash equivalents, beginning of period............................. 142,097 81,291
-------- -------
Cash and cash equivalents, end of period................................... $ 286,520 $ 73,415
======== =======
Supplemental cash flow disclosures:
Interest paid.......................................................... $ 785,495 $ 610,715
Income taxes paid (received)........................................... 0 (8,823)
Treasury stock issued in connection with acquisition of
printer manufacturer, a noncash investing and
financing activity .................................................... $ 2,500,000
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See accompanying notes to condensed consolidated financial statements.
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BULL RUN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
In management's opinion, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments (consisting solely of
normal, recurring adjustments) necessary to present fairly the financial
position and results of operations for the interim periods reported. These
condensed consolidated financial statements should be read in conjunction with
the consolidated financial statements contained in the Annual Report on Form
10-K of Bull Run Corporation for the year ended December 31, 1997.
The accompanying condensed consolidated financial statements include
the accounts of Bull Run Corporation and its wholly-owned subsidiary, Datasouth
Computer Corporation (collectively, unless the context otherwise requires, the
"Company"), after elimination of intercompany accounts and transactions.
2. ACQUISITION OF PRINTER MANUFACTURER
Effective January 2, 1998, the Company acquired all of the outstanding
common stock of CodeWriter Industries, Inc. and all of the outstanding
membership interests of its affiliate, CW Technologies, LLC (collectively
referred to as "CodeWriter"), in a transaction valued at approximately $6.2
million, including the issuance of treasury stock valued at $2.5 million and
future consideration. CodeWriter designs and manufactures a line of direct
thermal and thermal transfer desktop and portable bar code label printers. The
acquisition has been accounted for under the purchase method of accounting,
whereby the results of operations of the acquired business are included in the
accompanying condensed consolidated financial statements as of its acquisition
date. The assets and liabilities of the acquired business are included based on
an allocation of the purchase price.
3. INVESTMENT IN AFFILIATED COMPANIES
The Company accounts for its investments in Gray Communications
Systems, Inc. ("Gray"), Host Communications, Inc. ("HCI"), Capital Sports
Properties, Inc. ("CSP") and Rawlings Sporting Goods Company, Inc. ("Rawlings")
using the equity method. The excess of the Company's investments in Gray, HCI,
CSP and Rawlings over the underlying equity thereof is being amortized over
forty years, with such amortization (totaling $152,000 and $194,000 in the three
months ended March 31, 1998 and 1997, respectively) reported as a reduction in
the Company's equity in earnings (losses) of affiliated companies.
The Company provides consulting services to Gray from time to time in
connection with Gray's acquisitions and dispositions. Income on a portion of
such fees is deferred and recognized over forty years as a result of the
Company's 16.9% equity investment position in Gray as of March 31, 1998 (with
such position representing a 27.5% voting interest in Gray). Gray is a
communications company located in Albany, Georgia which currently operates eight
television stations, three daily newspapers, advertising weekly shoppers, a
satellite broadcasting operation and a paging business.
The Company's direct common equity ownership in HCI, combined with the
Company's indirect common equity ownership in HCI through its investment in CSP,
was 30.2% as of March 31, 1998. Additionally, the Company owns indirectly,
through CSP, 51.5% of HCI's 8% series B preferred stock having a face value of
$3,750,000. HCI, based in Lexington,
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Kentucky and its 33.8%-owned affiliate, Universal Sports America, Inc. ("USA"),
provide media and marketing services to universities, athletic conferences and
various associations representing collegiate sports and, in addition, market and
operate amateur participatory sporting events. The Company recognizes its equity
in earnings of HCI on a six month lag basis, in order to align HCI's fiscal year
ending June 30 with the Company's fiscal year.
In November 1997, the Company entered into an Investment Purchase
Agreement with Rawlings, a leading supplier of team sports equipment. Pursuant
to this agreement, the Company acquired warrants to purchase approximately 10%
of Rawlings' common stock, and has the right, under certain circumstances, to
acquire additional warrants. Fifty percent of the purchase price, or $1,421,000,
was paid to Rawlings upon execution of the agreement. The remaining fifty
percent, plus interest at 7% per annum through the date of payment, will be due
on the earlier of the exercise date and the expiration date of the warrants. In
addition, under the terms of the agreement, the Company purchased approximately
10.4% of Rawlings' outstanding common stock in the open market from November
1997 through January 1998. Effective January 15, 1998, the date on which a
representative of the Company was elected to Rawlings' board of directors, the
Company has accounted for its investment in Rawlings by the equity method on a
one month lag basis, in order to align Rawlings' fiscal quarters ending November
30, February 28, May 31 and August 31 with the Company's fiscal quarters.
Aggregate operating results of affiliated companies (reflecting, for
1998, Gray and CSP for the three months ended March 31, 1998, combined with HCI
for the three months ended September 30, 1997 and Rawlings for the three months
ended February 28, 1998; and reflecting, for 1997, Gray and CSP for the three
months ended March 31, 1997, combined with HCI for the three months ended
September 30, 1996) were as follows:
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Three Months Ended Three Months Ended
March 31, 1998 March 31, 1997
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Operating revenue $ 96,775,000 $ 29,361,000
Income from operations 12,165,000 4,377,000
Net income (loss) 2,527,000 (277,000)
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Unaudited pro forma results for the three month periods ended March 31,
1998 and 1997, assuming the acquisition of CodeWriter and the investment in
Rawlings occurred on January 1, 1997 is presented below. This unaudited pro
forma data does not purport to represent the Company's actual results of
operations had the CodeWriter acquisition and the Rawlings' investment accounted
for under the equity method occurred on January 1, 1997, and should not serve as
a forecast of the Company's operating results for any future periods. The pro
forma adjustments, including (a) the elimination of certain expenses pertaining
to the former owners and members of CodeWriter; (b) adjustments to the Company's
equity in earnings (losses) for the Company's proportionate share of Rawlings'
net income; (c) the increase in interest expense in connection with acquisition
debt incurred; (d) adjustments for the income tax effects of the pro forma
adjustments; and (e) the increase in the number of outstanding shares of the
Company's common stock to reflect the treasury shares issued to the former
shareholders and members of CodeWriter, are based solely upon certain
assumptions that management believes are reasonable under the circumstances at
this time.
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Three Months Ended Three Months Ended
March 31, 1998 March 31, 1997
-------------- --------------
Revenue from printer operations $ 6,614,000 $ 6,874,000
Consulting fee income 2,000 598,000
Net income (loss) (1,061,000) 312,000
Net income (loss) per share:
Basic $ (.05) $ .01
Diluted $ (.05) $ .01
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4. INVENTORIES
Inventories associated with the Company's printer manufacturing
operations consisted of the following:
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March 31, 1998 December 31, 1997
-------------- ----------------
Raw materials $3,514,755 $2,734,387
Work-in-process 755,980 711,068
Finished goods 808,398 311,982
---------- ----------
$5,079,133 $3,757,437
========== ==========
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5. NOTE PAYABLE AND LONG-TERM DEBT
The Company amended all of its long-term debt agreements with two banks
subsequent to December 31, 1997. One of such agreements, which was amended on
February 20, 1998 (the "February Agreement"), provides for:
(a) a $5,000,000 term note, payable $250,000 per quarter beginning March 31,
1998, bearing interest at the London Interbank Offered Rate ("LIBOR") plus
2.75%; and
(b) a revolving bank credit facility for borrowings of up to $5,000,000
expiring February, 2001, bearing interest at LIBOR plus 2.75%, with a mandatory
reduction in February 1999 to $4,000,000 in available borrowings, under which
$4,271,000 was outstanding as of March 31, 1998. This revolving bank credit
facility replaced a similar $5,500,000 facility under which $5,472,000 was
outstanding as of December 31, 1997.
Another bank agreement, which was amended on March 20, 1998 (the "March
Agreement"), provides for:
(a) term notes for borrowings of up to $42,900,000 requiring no principal
payments prior to maturity on January 1, 2003, bearing interest at LIBOR plus
1.75%, under which $39,358,000 was outstanding as of March 31, 1998 and
$34,343,000 was outstanding as of December 31, 1997; and
(b) a revolving bank credit facility for borrowings of up to $3,500,000
expiring May 1, 1999, bearing interest at the bank's prime rate, under which
$3,076,000 was outstanding as of March 31, 1998 and $3,183,000 was outstanding
as of December 31, 1997.
The Company also has a demand bank loan of up to $2,000,000, under which
$1,500,000 was outstanding as of March 31, 1998 and December 31, 1997, bearing
interest at the bank's prime rate.
In January 1998, the Company executed two interest rate swap agreements which
effectively modify the interest characteristics of $24,750,000 of its
outstanding long-term debt. The agreements involve the exchange of amounts based
on a fixed interest rate for amounts based on variable interest rates over the
life of the agreements, without an exchange of the notional amount upon which
the payments are based. The differential to be paid or received as interest
rates change will be accrued and recognized as an adjustment of interest expense
related to the debt. The Company effectively converted $20,000,000 and
$4,750,000 of floating rate debt to a fixed rate basis under two separate
agreements. Under the first agreement, $20,000,000 of long-term debt is subject
to a one-year forward swap agreement, whereby beginning January 1, 1999 and for
the following nine years, the Company will be subject to a fixed rate of 7.83%,
instead of LIBOR plus 1.75%, the rate in effect until then. Under the second
agreement, $4,750,000 of long-term debt will be subject to a fixed rate of 8.9%
beginning March 31, 1998, instead of LIBOR plus 2.75%, the rate in effect until
then. The notional amount on the $4,750,000 interest rate swap agreement
amortizes $250,000 per quarter through December 31, 2002.
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6. INCOME TAXES
The principal differences between the federal statutory tax rate of 34% and the
effective tax rates are nondeductible goodwill amortization and state income
taxes.
7. EARNINGS (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted earnings
(loss) per share:
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Three Months Ended Three Months Ended
March 31, 1998 March 31, 1997
-------------- --------------
Net income (loss) $ (1,083,012) $ 19,910
============ ============
Weighted average shares for basic earnings
(loss) per share 22,028,667 21,363,389
Effect of dilutive employee stock options 0 895,588
------------ ------------
Adjusted weighted average shares and
assumed conversions for diluted earnings
(loss) per share 22,028,667 22,258,977
============ ============
Basic earnings (loss) per share $ (.05) $ .00
Diluted earnings (loss) per share $ (.05) $ .00
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - FIRST QUARTER 1998 AS COMPARED TO FIRST QUARTER 1997
Total revenue for the three months ended March 31, 1998, primarily from the
Company's printer manufacturing operations (including CodeWriter, which was
acquired on January 2, 1998), was $6,616,000, compared to $6,063,000 for the
same period in 1996. Printer sales to the Company's largest customer, including
sales of the Company's new airline ticket printer introduced in December 1997,
were approximately $2.05 million in 1998 compared to $1.85 million in 1997.
Short term revenue trends in the Company's printer business fluctuate due to
variable ordering patterns of large customers. The increase in 1998 revenue
compared to 1997 was due to approximately $1.1 million contributed by CodeWriter
products in 1998, net of a $596,000 decrease in consulting fee income in 1998
compared to 1997.
Gross profit from printer operations of 24.9% for the three months ended March
31, 1998, decreased from 27.9% during the same period in 1997 due to (a) a
different mix of products sold; (b) manufacturing overhead costs associated with
CodeWriter's operation, much of which will not recur following the integration
of CodeWriter's printer manufacturing into the Company's existing manufacturing
facility during the second quarter of 1998; and (c) nonrecurring overhead costs
incurred during 1998 associated with the new product introductions.
The Company provides consulting services to Gray Communications Systems, Inc.
("Gray") in connection with Gray's acquisitions and acquisition financing. The
Company invoiced Gray for fees totaling $700,000 during the three months ended
March 31, 1997 in connection with Gray's completed and pending acquisitions, of
which $107,000 was deferred for future period revenue recognition. A portion of
income on such fees, approximating the Company's common equity ownership
position in Gray, is deferred and recognized over forty years as a result of the
Company's equity investment position in Gray. Deferred consulting fees were
$398,000 as of March 31, 1998. The Company did not invoice Gray for consulting
services during the three months ended March 31, 1998. There can be no assurance
that the Company will provide any additional consulting services in the future.
Operating expenses of $2,129,000 for the three months ended March 31, 1998
represented a 34% increase over operating expenses for the same period last
year, due primarily to (a) an increase in research and development expenses for
the first quarter of 1998 compared to the first quarter of 1997; (b) certain
professional fees and other services rendered in the first quarter of 1998
compared to the second quarter of 1997; (c) goodwill amortization expense in
1998 associated with the purchase of CodeWriter; and (d) operating expenses
associated with the CodeWriter operations, some of which are nonrecurring after
the first quarter of 1998. The Company's operating expenses include goodwill
amortization of $120,000 for the first quarter of 1998, compared to $75,000 for
the first quarter of 1997.
Equity in earnings (losses) of affiliated companies, totaling $(270,000) and
$(184,000) for the three months ended March 31, 1998 and 1997, respectively,
included the Company's proportionate share of the earnings of Gray, Host
Communications, Inc. ("HCI"), Capital Sports Properties, Inc. ("CSP"), and
beginning January 15, 1998, Rawlings Sporting Goods Company, Inc. ("Rawlings"),
net of goodwill amortization totaling $194,000 and $152,000 for the respective
periods.
Interest expense, net of dividends accrued on the Company's investment
in Gray's series A and series B preferred stock, totaling $752,000 and $316,000
for the three months ended March 31, 1998 and 1997, respectively, was
attributable to bank term loans,
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borrowings on the Company's revolving bank credit facilities and other bank
notes payable. The increase in interest expense was attributable to bank
financing subsequent to the first quarter of 1997. The proceeds of such bank
financing were used to fund the Company's investments in Rawlings, additional
investments in Gray and HCI, and purchase of CodeWriter.
The principal differences between the federal statutory tax rate of 34%
and the effective tax rates for each period are nondeductible goodwill
amortization and state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company amended all of its long-term debt agreements with two banks
subsequent to December 31, 1997. Under an agreement amended February 20, 1998,
the Company entered into a $5.0 million term loan payable to a bank in quarterly
installments of $250,000 through December 2002, bearing interest payable monthly
at the London Interbank Offered Rate ("LIBOR") plus 2.75%, and a revolving bank
credit facility for borrowings of up to $5.0 million expiring February 2001,
bearing interest payable monthly principally at LIBOR plus 2.75%, with a
mandatory reduction in February 1999 to $4.0 million in available borrowings.
Under an agreement amended March 20, 1998, the Company has outstanding two term
notes for bank borrowings of up to $42.9 million (the "Term Loans") requiring no
principal payments prior to maturity in January 2003, bearing interest at LIBOR
plus 1.75%, and a revolving bank credit facility for borrowings of up to $3.5
million expiring May 1, 1999, bearing interest at the bank's prime rate. As of
March 31, 1998, the Company had $39,358,000 outstanding under the Term Loans and
$7,347,000 outstanding under the two revolving bank credit facilities.
The Company also has a demand bank note for borrowings of up to $2.0 million
under which $1,500,000 was outstanding as of March 31, 1998, bearing interest at
the bank's prime rate.
Dividends on the series B preferred stock of Gray owned by the Company are
payable in cash at an annual rate of $600 per share or, at Gray's option,
payable in additional shares of series B preferred stock. The Company
anticipates that dividends on the series B preferred stock will continue to be
paid in additional shares of series B preferred stock for the foreseeable
future.
The Company has in effect a stock repurchase program authorized by its Board of
Directors for the repurchase of up to 2,000,000 shares of its common stock.
Repurchases may be made from time to time in the open market or directly from
shareholders at prevailing market prices, and may be discontinued at any time.
No shares were repurchased during the first quarter of 1998. During the first
quarter of 1997, the Company repurchased 561,010 shares at a total cost of
$1,406,000.
Inventories as of March 31, 1998 increased to $5,079,000 from $3,757,000 as of
December 31, 1997, as a result of the purchase of CodeWriter, which added
inventories of $538,000 at the acquisition date, and an increase in raw
materials on hand associated with the new airline ticket printer. The Company's
total working capital of $3,174,000 as of March 31, 1998 increased from
$2,513,000 as of December 31, 1997, as a result of the CodeWriter purchase,
which added $409,000 in working capital as of the acquisition date.
The purchase price of CodeWriter was paid in the form of $2.5 million in cash
and $2.5 million in the Company's common stock. In addition, the Company is
obligated to pay to the members of CW Technologies, LLC, within 45 days
following the end of each calendar quarter ending date through December 31,
2001, an amount equal to 4% of revenue generated by the
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Company from CodeWriter products and services during the immediately preceding
calendar quarter, but in no event will such payment be less than $50,000 in any
quarter, and in no event will the aggregate amount of such payments exceed $1.2
million. These quarterly payments will be accounted for as additional purchase
price. The initial $2.5 million cash acquisition price was financed under the
$5.0 million term note previously described.
In 1997, the Company entered into an Investment Purchase Agreement with
Rawlings. Pursuant to this agreement, the Company acquired warrants to purchase
925,804 shares of Rawlings' common stock, and has the right, under certain
circumstances, to purchase additional warrants. The Company's total cost to
purchase the warrants pursuant to this agreement (excluding the additional
warrants) was $2,842,000. Fifty percent of the purchase price, or $1,421,000,
was paid to Rawlings in 1997. The remaining fifty percent of the purchase price,
plus interest at 7% per annum from November 21, 1997 until the date of payment,
will be due on the earlier of the date of exercise and the date of expiration of
the warrants. In the event of a partial exercise of the warrants, a pro rata
portion of the purchase price with interest accrued thereon will be payable. The
warrants have a four year term and an exercise price of $12.00 per share, but
are exercisable only if Rawlings' common stock closes at or above $16.50 for
twenty consecutive trading days during the four year term. In addition, under
the terms of the agreement, the Company purchased approximately 10.4% of the
outstanding shares of Rawlings' common stock in the open market from November
1997 through January 1998 (of which, 5.4% was acquired in 1998 at a cost of
$4,953,000). Investments in Rawlings were financed with borrowings under the
$42.9 million Term Loans previously described.
In January 1998, the Company executed two interest rate swap agreements
which effectively modify the interest characteristics of $24,750,000 of its
outstanding long-term debt. The agreements involve the exchange of amounts based
on a fixed interest rate for amounts based on variable interest rates over the
life of the agreements, without an exchange of the notional amount upon which
the payments are based. The differential to be paid or received as interest
rates change will be accrued and recognized as an adjustment of interest expense
related to the debt. The Company effectively converted $20,000,000 and
$4,750,000 of floating rate debt to a fixed rate basis under two separate
agreements. Under the first agreement, $20,000,000 of long-term debt is subject
to a one-year forward swap agreement, whereby beginning January 1, 1999 and for
the following nine years, the Company will be subject to a fixed rate of 7.83%,
instead of LIBOR plus 1.75%, the rate in effect until then. Under the second
agreement, $4,750,000 of long-term debt will be subject to a fixed rate of 8.9%
beginning March 31, 1998, instead of LIBOR plus 2.75%, the rate in effect until
then. The notional amount on the $4,750,000 interest rate swap agreement
amortizes $250,000 per quarter through December 31, 2002.
The Company anticipates that its current working capital, funds
available under its revolving credit facilities, quarterly cash dividends on the
Gray Series A preferred stock and Gray class A common stock, and cash flow from
operations will be sufficient to fund its debt service, working capital
requirements and capital spending requirements for at least the next twelve
months. Any capital required for potential additional business acquisitions
would have to be funded by issuing additional securities or by entering into
other financial arrangements.
IMPACT OF YEAR 2000
Some of the Company's older computer programs were written using two
digits rather than four to define the applicable year. As a result, those
computer programs have time- sensitive software that recognize a date using "00"
as the year 1900 rather than the year 2000. This could cause a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices,
<PAGE>
or engage in similar normal business activities. The Company has completed an
assessment and will have to modify or replace portions of its software so that
its computer systems will function properly with respect to dates in the year
2000 and thereafter. Management does not expect the cost of any necessary
modifications or replacements will have a material impact on the results of any
future financial reporting period. The project is estimated to be completed not
later than December 31, 1998, which is prior to any anticipated impact on the
Company's operating systems.
PART II. OTHER INFORMATION
<TABLE>
<CAPTION>
<S> <C>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 10.1 - Amended and Restated Loan Agreement between Bull Run
Corporation and NationsBank, N.A. dated as of March 20, 1998
Exhibit 10.2 - $10,400,000 First Term Loan Note dated March 20, 1998
Exhibit 10.3 - $32,500,000 Second Term Loan Note dated March 20,
1998
Exhibit 10.4 - $3,500,000 Revolving Credit Note dated March 20, 1998
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C>
BULL RUN CORPORATION
Date: May 13, 1998 By: /s/ FREDERICK J. ERICKSON
-------------------------
Frederick J. Erickson
Vice President-Finance, Treasurer
and Assistant Secretary
</TABLE>
<PAGE>
EXHIBIT 10.1
- --------------------------------------------------------------------------------
AMENDED AND RESTATED LOAN AGREEMENT
BETWEEN
BULL RUN CORPORATION
AND
NATIONSBANK, N.A.
DATED AS OF MARCH 20, 1998
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS; CONSTRUCTION...........................................................................2
1.1 Definitions..................................................................................................2
1.2 Accounting Terms and Determinations.........................................................................10
1.3 Other Definitional Terms....................................................................................11
ARTICLE 2 REVOLVING CREDIT FACILITY..........................................................................11
2.1 Revolving Credit Loans; Use of Proceeds.....................................................................11
2.2 Interest on Revolving Credit Loans..........................................................................11
2.3 Revolving Credit Note; Repayment of Principal and Interest..................................................12
2.4 Voluntary Termination or Reductions in Revolving Credit Facility............................................12
2.5 Letters of Credit...........................................................................................13
ARTICLE 3 TERM LOAN FACILITIES...............................................................................13
3.1 First Term Loan Facility....................................................................................13
3.2 Second Term Loan Facility...................................................................................13
3.3 Interest on Term Loans......................................................................................14
3.4 Term Loan Notes; Repayment of Principal and Interest........................................................14
ARTICLE 4 GENERAL CREDIT TERMS...............................................................................15
4.1 Credit Expiration Dates; Extensions.........................................................................15
4.2 Fees........................................................................................................15
4.3 Payments; Prepayments and Computations......................................................................16
4.4 Collateral..................................................................................................16
4.5 Loan Account................................................................................................17
4.6 Capital Adequacy............................................................................................17
4.7 Agreements Regarding Interest and Other Charges.............................................................18
4.8 Unavailability..............................................................................................18
4.9 Increased Costs.............................................................................................18
4.10 Funding Losses..............................................................................................19
4.11 Assumptions Concerning Funding of LIBOR Advances............................................................19
4.12 Additional Fees or Compensation.............................................................................19
ARTICLE 5 CONDITIONS PRECEDENT TO LOANS......................................................................20
5.1 Conditions Precedent to Closing.............................................................................20
5.2 Conditions Precedent to All Loans...........................................................................20
5.3 Conditions Precedent to the Second Term Loans...............................................................21
</TABLE>
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<TABLE>
<S> <C>
ARTICLE 6 REPRESENTATIONS AND WARRANTIES.....................................................................22
6.1 Organization; Authorization; Valid and Binding Obligations..................................................22
6.2 Financial Statements........................................................................................22
6.3 Actions Pending.............................................................................................22
6.4 Conflicting Agreements and Other Matters....................................................................22
6.5 ERISA.......................................................................................................23
6.6 Governmental Consent........................................................................................23
6.7 Margin Regulations and Investment Company Act. Etc..........................................................23
6.8 Disclosure..................................................................................................23
6.9 Reaffirmation...............................................................................................23
ARTICLE 7 AFFIRMATIVE COVENANTS..............................................................................24
7.1 Financial Statements and Notices............................................................................24
7.2 Inspection of Property......................................................................................26
7.3 Books and Records...........................................................................................26
7.4 Maintenance of Corporate Existence..........................................................................26
7.5 Financial Covenants.........................................................................................26
7.6 Primary Depository Relationships............................................................................26
7.7 Interest Rate Contracts.....................................................................................27
7.8 Margin Call.................................................................................................27
7.9 Notices Regarding Purchaser.................................................................................27
ARTICLE 8 NEGATIVE COVENANTS.................................................................................27
8.1 Merger, Consolidation, Etc..................................................................................28
8.2 ERISA Matters...............................................................................................28
8.3 Fiscal Year Change..........................................................................................28
8.4 Use of Proceeds.............................................................................................28
ARTICLE 9 EVENTS OF DEFAULT..................................................................................28
9.1 Events of Default...........................................................................................28
9.2 Remedies....................................................................................................30
ARTICLE 10 MISCELLANEOUS......................................................................................31
10.1 Notices.....................................................................................................31
10.2 No Waiver; Remedies Cumulative..............................................................................31
10.3 Payment of Expenses; Indemnity..............................................................................32
10.4 Successors and Assigns: Sale of Interest....................................................................32
10.5 Amendments..................................................................................................32
10.6 Time of Essence.............................................................................................33
10.7 Governing Law...............................................................................................33
10.8 Counterparts................................................................................................33
10.9 Effectiveness; Survival.....................................................................................33
</TABLE>
ii
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<TABLE>
<S> <C>
10.10 Severability.......................................................................................33
10.11 Independence of Covenants..........................................................................33
10.12 Headings Descriptive...............................................................................33
10.13 Termination of Agreement...........................................................................33
10.14 Entire Agreement...................................................................................34
10.15 Jury Trial Waiver; Consent to Forum................................................................34
</TABLE>
EXHIBITS
Exhibit A Copy of the Rawlings Warrant
Exhibit B Copy of Warrant to purchase 487,500 shares of common stock of Gray
Exhibit C Copy of Warrant to purchase 250,000 shares of common stock of Gray
iii
<PAGE>
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT is made and entered into as of
March 20, 1998 by and between BULL RUN CORPORATION, a Georgia corporation
("Borrower"), and NATIONSBANK, N.A. ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower and Lender are parties to a certain Loan Agreement dated
as of March 29, 1995, as modified and amended by the First Modification of Loan
Agreement, dated as of January 3, 1996, the Second Modification of Loan
Agreement dated as of September 24, 1996, the Third Modification of Loan
Agreement dated as of January 27, 1997, the Fourth Modification of Loan
Agreement dated as of March 27, 1997, the Fifth Modification of Loan Agreement
dated as of August 14, 1997, the Sixth Modification of Loan Agreement dated as
of November 21, 1997 and the Seventh Modification of Loan Agreement dated as of
December 2, 1997 (as amended, the "Prior Loan Agreement"); and
WHEREAS, the Lender and the Borrower have agreed to amend and restate the
Prior Loan Agreement in its entirety, as set forth herein; and
WHEREAS, the Borrower acknowledges and agrees that the Liens (as defined in
the Prior Loan Agreement) granted to the Lender pursuant to the Prior Loan
Agreement and the Credit Documents (as defined in the Prior Loan Agreement),
shall remain outstanding and in full force and effect in accordance with the
Prior Loan Agreement and shall continue to secure the Obligations (as defined
herein); and
WHEREAS, the Borrower and all other parties hereto acknowledge and agree
that (i) the Obligations (as defined herein) represent, among other things, the
amendment, restatement, renewal, extension, consolidation and modification of
the Obligations (as defined in the Prior Loan Agreement) arising in connection
with the Prior Loan Agreement and the other Credit Documents (as defined in the
Prior Loan Agreement) executed in connection therewith; (ii) the parties hereto
intend that the Prior Loan Agreement and the other Credit Documents (as defined
in the Prior Loan Agreement) executed in connection therewith and the collateral
pledged thereunder shall secure, without interruption or impairment of any kind,
all existing Obligations under the Prior Loan Agreement and the other Credit
Documents (as defined in the Prior Loan Agreement) executed in connection
therewith as so amended, restated, renewed, extended, consolidated and modified
hereunder, together with all other obligations hereunder; (iii) all Loans
evidenced by the Prior Loan Agreement and the other Credit Documents (as defined
in the Prior Loan Agreement) executed in connection therewith are hereby
ratified, confirmed and continued; and (iv) the Credit Documents (as defined
herein) are intended to restate, renew, extend, consolidate, amend and modify
the Prior Loan Agreement and the other Credit Documents (as defined in the Prior
Loan Agreement) executed in connection therewith; and
WHEREAS, the parties hereto intend that (i) the provisions of the Prior
Loan Agreement and the other
1
<PAGE>
Credit Documents (as defined in the Prior Loan Agreement) executed in connection
therewith, to the extent restated, renewed, extended, consolidated, amended and
modified hereby, be hereby superseded and replaced by the provisions hereof and
of the Credit Documents (as defined herein); (ii) the Notes (as hereinafter
defined) amend, renew, extend, modify, replace, be substituted for and supersede
in their entirety, but do not extinguish, the Obligations arising under, the
promissory notes issued pursuant to the Prior Loan Agreement; and (iii) entering
into, and performing their respective obligations under, this transaction not
constitute a novation.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto, the
parties hereby amend and restate in its entirety the Prior Loan Agreement as
follows as of the 20th day of March, 1998:
ARTICLE 1
DEFINITIONS; CONSTRUCTION
SECTION 1.1 DEFINITIONS. For the purposes of this Agreement, the following
terms shall have the indicated meanings as set forth below:
"Adjusted LIBOR" shall mean, for any Interest Period, the rate per annum
(rounded upwards to the nearest 1/16th of one percentage point, if necessary)
equal to the quotient obtained by dividing (i) the offered rate for United
States dollar deposits for a period comparable to such Interest Period appearing
on the Reuters Screen LIBO Page (or as quoted or published by such other
recognized independent quote service as may be selected by the Lender from time
to time) as of 11:00 a.m., London time, on the day that is two (2) Business Days
prior to the beginning of such Interest Period (but if at least two such rates
appear on such screen or are so quoted at such time, the offered rate for such
Interest Period shall be the arithmetic mean of such rates) by (ii) a percentage
equal to one (1) minus the then average stated maximum amount (stated as a
decimal) of all reserve requirements applicable to any member of the Federal
Reserve System in respect of Eurocurrency liabilities as defined in Regulation D
of the Board of Governors of the Federal Reserve System (or any successor
categories for such liabilities under such Regulation D).
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by, or under common control with, such Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Amended and Restated Loan Agreement, as
amended, supplemented or modified from time to time.
"Applicable Term Loan Margin" shall mean at any time, zero percentage
points (0.0%) for so much of the principal balance of any Term Loan as consists
of Prime Rate Advances and one and three-quarters percentage points (1.75%) for
so much of the principal balance of any Term Loan as consists of LIBOR Advances.
"Bankruptcy Code" shall mean the Bankruptcy Code of 1978, as amended (11
U.S.C. 101 et seq.).
2
<PAGE>
"Borrower" shall have the meaning given such term in the preamble to this
Agreement and shall include such Person's successors and assigns.
"Borrower Pledge Agreement" shall mean the Borrower Stock Pledge Agreement,
dated as of the date hereof, executed by Borrower in favor of the Lender, as the
same may be amended, supplemented, restated or otherwise replaced from time to
time.
"Business Day" shall mean any day excluding Saturday, Sunday and any other
day on which banks are required or authorized to close in Atlanta, Georgia, and
if the applicable Business Day relates to any LIBOR Advance or the determination
of any interest Period or the calculation of the Adjusted LIBOR therefor, any
day on which trading is not carried on by and between banks in United States
dollars in the London interbank market.
"Capital Expenditures" shall mean the cost, determined in accordance with
GAAP, of any fixed asset or improvement, or replacement, substitution, or
addition thereto, which have a useful life of more than one year, including,
without limitation, those arising in connection with Capital Leases.
"Capital Lease" shall mean any lease of Property by a Person that, in
accordance with GAAP, should be reflected as a liability on the balance sheet of
such Person.
"Cash Flow" shall mean, with respect to any period of determination, the
Borrower's operating profit for such period, as determined on a consolidated
basis together with its Subsidiaries in accordance with GAAP and reported on the
financial statements for such period delivered pursuant to Section 7.1 hereof,
plus any and all of the following to the extent deducted from or not included in
such operating profit: (a) amortization for such period, (b) depreciation and
other non-cash charges for such period, (c) dividend income for such period, (d)
fees received during such period in excess of fees recognized for such period,
(e) interest income for such period, (f) refunds for state and federal taxes
received during such period, minus (g) payments for state and federal taxes made
during such period.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" shall mean (i) the Pledged Shares, (ii) the Warrants, (iii)
the Rawlings Warrant, (iv) any and all other property which may be hereafter
pledged or collaterally assigned to Lender or in which Lender may be otherwise
granted a Lien to secure the Obligations pursuant to any and all of the Credit
Documents and (v) any and all cash and non-cash proceeds of the foregoing.
"Contractual Obligation" of any Person shall mean any provision of any
written agreement, instrument, security, or undertaking to which such Person is
a party or by which it or any of the property owned by it is bound.
"Credit Documents" shall mean, collectively, this Agreement, the Notes, the
Pledge Agreements and the Option Agreement.
3
<PAGE>
"Credit Parties" shall mean, collectively, the Borrower, Datasouth, the
Partnership and the Purchaser.
"Datasouth" shall mean Datasouth Computer Corporation, a Delaware
corporation and wholly-owned subsidiary of the Borrower, and its successors and
assigns.
"Debt Service" shall mean, for any period of determination, the sum of the
following (determined without duplication) for the Borrower and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP: (a)
interest expense for such period, (b) dividends paid during such period (other
than any dividend or distribution payable in capital stock of the same class),
and (c) the aggregate amount of all regularly scheduled payments of principal to
be made during the four consecutive fiscal quarters immediately following the
determination of the Debt Service Ratio pursuant to Section 7.5(c) hereof.
"Debt Service Ratio" shall mean for any period of determination the ratio
of (a) Cash Flow for such period to (b) Debt Service for such period.
"Default" shall mean any condition or event which, with notice or lapse of
time or both, would constitute an Event of Default.
"Default Interest Rate" shall mean for any particular type of Loan the
interest rate otherwise in effect with respect to such Loan plus an additional
two percentage points (2.0%).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended and in effect from time to time.
"Event of Default" shall have the meaning provided in Article IX hereof.
"First Term Loan" shall mean any and all advances made by Lender to
Borrower under the First Term Loan Facility.
"First Term Loan Facility" shall mean the term loan facility provided by
Lender to Borrower under Section 3.1 hereof.
"First Term Loan Facility Expiration Date" shall mean the date of this
Agreement.
"First Term Loan Maximum Availability" shall mean $10,400,000 (as such
amount may be adjusted from time to time pursuant to this Agreement).
"First Term Loan Note" shall mean the First Term Loan Note, dated as of the
date hereof, executed by the Borrower and payable to the order of Lender as
evidence of the First Term Loan and any extension, renewal, modification or
replacement thereof or therefor.
"GAAP" shall mean, as in effect from time to time, United States generally
accepted accounting principles
4
<PAGE>
(which the parties acknowledge and agree shall include the requirement that such
principles be consistently applied).
"Gray" shall mean Gray Communications Systems, Inc., a Georgia corporation,
and its successors and assigns.
"Host Communications" shall mean Host Communications, Inc., a Kentucky
corporation.
"Host Shares" shall mean all shares of common stock of Host Communications
now owned or hereafter acquired by Borrower and all cash and non-cash proceeds
thereof.
"Interest Period" shall mean, in the case of the determination of any
Adjusted LIBOR rate, a one (1), two (2), three (3), four (4), six (6) or (if
made available by Lender from time to time) twelve (12) month period as selected
by Borrower; provided, however, that (i) in the event an Interest Period would
end on a day which is not a Business Day, the Interest Period shall be deemed to
end on the immediately succeeding Business Day, unless such extension would
cause such Interest Period to end in the next calendar month, in which case the
Interest Period shall be deemed to end on the immediately preceding Business
Day, (ii) any Interest Period which begins on a day for which there is no
numerically corresponding day in the calendar month in which such Interest
Period ends shall, subject to parts (iii) and (iv) below, expire on the
immediately preceding Business Day, (iii) no Interest Period shall extend beyond
any date upon which any principal payment is due with respect to the Loans
unless the aggregate principal amount of Loans that are Prime Rate Advances or
that have Interest Periods which will expire on or before the date such
principal payment is due is equal to or in excess of the amount of such
principal payment, and (iv) Borrower shall not be entitled to select any
Interest Periods applicable to any LIBOR Advances consisting of a particular
type of Loan which extend beyond the final maturity date thereof.
"Interest Rate Contract" shall mean any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, or other similar
agreement or arrangement entered into by Borrower to protect the Borrower
against fluctuations in interest rates.
"Lender" shall have the meaning given such term in the preamble to this
Agreement and shall include such Person's successors and assigns.
"Letter of Credit" shall mean any letter of credit which may be now or
hereafter issued by the Lender for the account of Borrower and any extension,
renewal, modification or replacement thereof or therefor.
"Leverage Ratio" shall mean, for any particular Person, the ratio of such
Person's total liabilities to such Person's Net Worth, all as determined on a
consolidated basis.
"LIBOR Advance" shall mean any Loans hereunder (or portion thereof) which
bear interest based on Adjusted LIBOR.
5
<PAGE>
"Lien" shall mean any mortgage, pledge, security interest, security
deposit, encumbrance, lien or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction).
"Loans" shall mean, collectively, the Revolving Credit Loans and the Term
Loans.
"Margin Regulations" shall mean Regulation G, Regulation T, Regulation U or
Regulation X of the Board of Governors of the Federal Reserve System, as the
same may be in effect from time to time.
"Marketable Securities" shall mean any security traded on the American
Stock Exchange, the New York Stock Exchange or NASDAQ.
"Material Adverse Effect" shall mean a material adverse effect upon, or a
material adverse change in, any of the (i) business, results of operations,
properties, prospects or financial condition of Purchaser or of Borrower and its
Subsidiaries taken as a whole, (ii) legality, validity, binding effect or
enforceability of any Credit Document, or (iii) ability of any Credit Party to
perform its payment obligations under the Credit Documents.
"Maturity Date" shall mean January 1, 2003.
"Net Worth" shall mean, as of any date and with respect to any Person, such
Person's total shareholders' equity (including capital stock, additional paid-in
capital and retained earnings, after deducting treasury stock) which would
appear as such on a balance sheet of such Person as of such date prepared on a
consolidated basis.
"Notes" shall mean, collectively, the Revolving Credit Note and the Term
Loan Notes.
"Obligations" shall mean, collectively, all amounts now or hereafter owing
to Lender by Borrower pursuant to the terms of or as a result of this Agreement
or any other Credit Document, including without limitation, the unpaid principal
balance of any and all Loans and all interest, fees, expenses and other charges
relating thereto or accruing thereon, as well as any and all other indebtedness,
liabilities, and obligations of Borrower, whether direct or indirect, absolute
or contingent, or liquidated or unliquidated, which may be now existing or may
hereafter arise under or as a result of any of the Credit Documents (including,
without limitation, obligations of Borrower under Interest Rate Contracts with
Lender), and together with any and all renewals, extensions, modifications or
refinancings of any of the foregoing.
"Officer's Certificate" shall mean a certificate signed in the name of the
Borrower by its president, any vice president, its chief executive officer or
its chief financial officer.
"Option Agreement" shall mean the Option Agreement, dated as of the date
hereof, between the Purchaser and the Lender and consented to by the other
Credit Parties, as the same may be amended,
6
<PAGE>
supplemented, restated or otherwise replaced from time to time.
"Partnership" shall mean The Robinson-Prather Partnership, a Georgia
general partnership, and its successors and assigns.
"Partnership Pledge Agreement" shall mean the Partnership Stock Pledge
Agreement, dated as of the date hereof, executed by the Partnership in favor of
the Lender, as the same may be amended, supplemented, restated or otherwise
replaced from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Person" shall mean any individual, partnership, firm, corporation,
association, joint venture, trust or other entity, or any government or
political subdivision or agency, department or instrumentality thereof.
"Plan" shall mean any "employee pension benefit plan" (as defined in
Section 3 of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by Borrower or any other Credit Party or by
any trade or business, whether or not incorporated, which, together with
Borrower or any other Credit Party, is under common control.
"Pledge Agreements" shall mean the Borrower Pledge Agreement, the Purpose
Credit Borrower Pledge Agreement, the Subsidiary Pledge Agreement, the Purpose
Credit Subsidiary Pledge Agreement and the Partnership Pledge Agreement.
"Pledged Shares" shall mean, collectively, all shares of common stock or
preferred stock covered by any or all of the Pledge Agreements and all cash and
non-cash proceeds thereof.
"Prime Rate" shall mean a per annum rate equal to the rate of interest
announced from time to time by the Lender as its "prime rate", "prime lending
rate", "base rate" or similar reference rate (with each change therein to be
effective as of the date of such change). Each such rate announced by the Lender
is a reference rate and does not necessarily represent the lowest or best rate
actually charged by it to any customer. The Lender may make commercial loans or
other loans at rates of interest at, above or below such reference rate. In the
event the Lender ceases to use its "prime rate", prime lending rate", "base
rate" or similar reference rate as a standard, the Lender shall designate a
substitute therefor.
"Prime Rate Advance" shall mean any Loans hereunder (or portion thereof)
which bear interest based on the Prime Rate.
"Prior First Term Loan" shall mean the $10,400,000 loan made by Lender to
Borrower on or about March 29, 1995 under Section 3.1 of the Prior Loan
Agreement as originally executed and delivered.
"Prior Loan Agreement" shall have the meaning given such term in the
preamble to this Agreement.
7
<PAGE>
"Prior Second Term Loan" shall mean collectively, (i) the $13,100,000 loan
made by Lender to Borrower as the Second Term Loan under the Prior Loan
Agreement, (ii) the $5,000,000 loan made by Lender to Borrower as the Third Term
Loan under the Prior Loan Agreement, (iii) the $1,400,000 loan made by Lender to
Borrower as the Fourth Term Loan under the Prior Loan Agreement and (iv) loans
made by Lender to Borrower as Additional Term Loans under the Prior Loan
Agreement and (v) loans made by Lender to Borrower pursuant to the Unsecured
Notes.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Purchaser" shall mean J. Mack Robinson, a Georgia resident, and his heirs,
legal representatives, successors and assigns.
"Purpose Credit Borrower Pledge Agreement" shall mean the Purpose Credit
Borrower Stock Pledge Agreement, dated as of the date hereof, executed by
Borrower in favor of the Lender, as the same may be amended, supplemented or
restated or otherwise replaced from time to time.
"Purpose Credit Subsidiary Pledge Agreement" shall mean the Purpose Credit
Subsidiary Pledge Agreement, dated as of the date hereof, executed by Datasouth
in favor of the Lender, as the same may be amended, supplemented, restated or
otherwise replaced from time to time.
"Rawlings" shall mean Rawlings Sporting Goods Company, Inc.
"Rawlings Shares" shall mean all shares of common stock of Rawlings now
owned or hereafter acquired by Borrower and all cash and non-cash proceeds
thereof.
"Rawlings Warrant" shall mean the warrant to purchase 925,804 shares of the
common stock of Rawlings issued on November 21, 1997, by Rawlings in favor of
Borrower, as more fully described in the Common Stock Purchase Warrant, a true
and correct copy of which is attached hereto as Exhibit A, and any extension,
modification, supplement or replacement thereof or therefor.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA.
"Requirement of Law" for any person shall mean the articles or certificate
of incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation, or determination of any
arbitrator or a court or other governmental authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Revolving Credit Facility" shall mean the revolving credit facility
provided by Lender to Borrower under Article II hereof.
"Revolving Credit Facility Expiration Date" shall mean May 1, 1999 (as such
date may be extended,
8
<PAGE>
accelerated or amended from time to time pursuant to this Agreement).
"Revolving Credit Loans" shall mean, collectively, any and all advances
made by Lender to Borrower under the Revolving Credit Facility.
"Revolving Credit Maximum Availability" shall mean $3,500,000 (as such
amount may be adjusted from time to time pursuant to this Agreement).
"Revolving Credit Note" shall mean the Revolving Credit Note, dated as of
the date hereof, executed by the Borrower and payable to the order of the Lender
as evidence of the Revolving Credit Loans and any extension, renewal,
modification or replacement thereof or therefor.
"SEC" shall mean the Securities and Exchange Commission, or any successor
thereto.
"Second Term Loan" shall mean any and all advances made by Lender to
Borrower under the Second Term Loan Facility.
"Second Term Loan Facility" shall mean the term loan facility provided by
Lender to Borrower under Section 3.2 hereof.
"Second Term Loan Facility Expiration Date" shall mean July 31, 1998 (as
such date may be extended, accelerated or amended from time to time pursuant to
this Agreement).
"Second Term Loan Maximum Availability" shall mean $32,500,000 (as such
amount may be adjusted from time to time pursuant to this Agreement).
"Second Term Loan Note" shall mean the Second Term Loan Note, dated as of
the date hereof, executed by the Borrower and payable to the order of the Lender
as evidence of the Second Term Loan and any extension, renewal, modification or
replacement thereof or therefor.
"Second Term Loan Obligations" shall mean, collectively, any and all
Obligations of Borrower to pay Lender the principal of, interest or fees on,
collection costs for, or any other sums owing in respect of the Second Term Loan
or the Second Term Loan Note.
"Subsidiary" means, as applied to Borrower, (i) any corporation of which
50% or more of the outstanding stock (other than directors' qualifying shares)
having ordinary voting power to elect a majority of its board of directors (or
other governing body), regardless of the existence at the time of a right of the
holders of any class or classes (however designated) of securities of such
corporation to exercise such voting power by reason of the happening of any
contingency, or any partnership of which 50% or more of the outstanding
partnership interests is, at the time, directly or indirectly owned by Borrower
or by one or more Subsidiaries of Borrower, and (ii) any other entity which is
directly or indirectly controlled or capable of being controlled by Borrower or
by one or more Subsidiaries of Borrower; provided, however, that Gray
Communications Systems, Inc. and its
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Subsidiaries, Capital Sports Properties, Inc. and its Subsidiaries and Host
Communications and its Subsidiaries shall not constitute Subsidiaries of
Borrower for purposes of this Agreement or any other Credit Document.
"Subsidiary Pledge Agreement" shall mean the Subsidiary Stock Pledge
Agreement, dated as of the date hereof, executed by Datasouth in favor of the
Lender, as the same may be amended, supplemented, restated or otherwise replaced
from time to time.
"Term Loan Facilities" shall mean, collectively, the First Term Loan
Facility and the Second Term Loan Facility.
"Term Loan Notes" shall mean, collectively, the First Term Loan Note and
the Second Term Loan Note.
"Term Loans" shall mean, collectively, the First Term Loan and the Second
Term Loan.
"Unsecured Notes" shall mean, collectively, (1) that certain unsecured
promissory note issued by Borrower to Lender dated as of December 15, 1997 in an
original principal amount of $686,100; (2) that certain unsecured promissory
note issued by Borrower to Lender dated as of December 24, 1997 in an original
principal amount of $583,184; and (3) that certain promissory note issued by
Borrower to Lender dated as of January 9, 1998 in an original principal amount
of $2,965,447.
"Voting Stock" shall mean, with respect to any Person, any shares of stock
or other equity interests of any class or classes of such Person whose holders
are entitled under ordinary circumstances (irrespective of whether at the time
stock or other equity interests of any other class or classes shall have or
might have voting power by reason of the happening of any contingency) to vote
for the election of a majority of the directors, managers, or other governing
body of such Person.
"Warrants" shall mean (a) the warrant to purchase 487,500 shares of the
common stock of Gray issued on January 3, 1996, by Gray in favor of Borrower, a
copy of which is attached hereto as Exhibit B, and any extension, modification,
supplement or replacement thereof or therefor, and (b) the warrant to purchase
250,000 shares of common stock of Gray issued or to be issued by Gray in favor
of the Borrower in connection with the issuance of series B preferred stock of
Gray, a copy of which is attached hereto as Exhibit C, and any extension,
modification, supplement or replacement thereof or therefor.
SECTION 1.2 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise defined
or specified herein, all accounting terms shall be construed herein, all
accounting determinations hereunder shall be made, all financial statements
required to be delivered hereunder shall be prepared, and all financial records
shall be maintained in accordance with GAAP; provided, however, that compliance
with any and all financial covenants and calculations provided for herein, and
in the definitions used in such covenants and calculations, shall be calculated,
made and applied on a consolidated basis in accordance with GAAP as in effect on
the date of this Agreement applied on a basis consistent with the preparation of
the financial statements referred to in Section 6.2 hereof unless and until the
parties hereto enter into a written amendment agreement with respect thereto.
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SECTION 1.3 OTHER DEFINITIONAL TERMS. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Any pronoun used herein shall be deemed to cover all genders and all
singular terms used herein shall include the plural and vice versa. Unless
otherwise expressly indicated herein, all references herein to a period of time
which runs "from" or "through" a particular date shall be deemed to include such
date, and all references herein to a period of time which runs "to" or "until" a
particular date shall be deemed to exclude such date. Unless otherwise defined
or specified herein, all other terms used herein shall have the meanings, if
any, given such terms in the Uniform Commercial Code as in effect on this date
in the State of Georgia as the same may be hereafter amended or supplemented
from time to time.
ARTICLE 2
REVOLVING CREDIT FACILITY
SECTION 2.1 REVOLVING CREDIT LOANS; USE OF PROCEEDS.
(a) Subject to the terms and conditions of this Agreement, the
Lender agrees to advance to the Borrower, from time to time prior to the
Revolving Credit Facility Expiration Date and upon the Borrower's request
therefor, Revolving Credit Loans in an aggregate principal amount outstanding at
any one time not to exceed the Revolving Credit Maximum Availability as then in
effect.
(b) The proceeds of each Revolving Credit Loan shall be used to
finance the working capital, capital expenditures or other general corporate
needs of the Borrower. All borrowings of Revolving Credit Loans shall constitute
part of a single loan transaction between Borrower and the Lender.
(c) If the unpaid balance of the Revolving Credit Loans should
exceed the applicable limit set forth in subsection (a) above at any time or if
Lender in its discretion shall elect to make any Revolving Credit Loans on or
after the Revolving Credit Facility Expiration Date, such Revolving Credit Loans
shall nevertheless constitute Revolving Credit Loans hereunder that are secured
by the Collateral and entitled to all benefits thereof and of the other Credit
Documents. Insofar as Borrower may request and Lender may be willing in its sole
and absolute discretion to make Revolving Credit Loans to Borrower at a time
when the unpaid balance of the Revolving Credit Loans exceeds, or would exceed
with the making of such Revolving Credit Loan, the applicable limit set forth
above, such overadvances shall be repaid on demand and shall be evidenced by the
Revolving Credit Note.
SECTION 2.2 INTEREST ON REVOLVING CREDIT LOANS.
(a) The unpaid principal balance of the Revolving Credit Loans
shall bear interest from time to time at a rate per annum equal to the Prime
Rate as then in effect; provided, however that Borrower may, by a written notice
(or by telephonic notice promptly confirmed in writing) delivered to the Lender
not later than 10:00 a.m. (Atlanta time) on the second Business Day prior to any
Interest Period designated by the Borrower in such notice, direct that interest
accrue on the unpaid principal balance of the Revolving Credit Loans (or any
portion thereof which when added to all other LIBOR Advances then outstanding
under any of the Loans and
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which have the same Interest Period totals an amount of not less than $100,000
or any greater integral multiple thereof) outstanding from time to time during
such Interest Period at a rate per annum equal to the sum of the Adjusted LIBOR
for such Interest Period plus one and three-quarters percentage points (1.75%);
provided, further, however, that (i) upon the occurrence and during the
continuation of any Event of Default under Section 9.1(i), (ii) or (iii) hereof,
the Lender may, upon notice to the Borrower, suspend Borrower's right to use the
aforesaid Adjusted LIBOR option, (ii) Borrower may not have more than six (6)
Adjusted LIBOR-based interest rates in effect under this Section at any one
time, and (iii) the interest rate applicable to the Revolving Credit Loans shall
be subject to adjustment as provided in paragraph (b) below.
(b) After the occurrence and during the continuation of any Event
of Default, the unpaid principal balance of the Revolving Credit Loans (and, to
the extent permitted by applicable law, all accrued interest thereon) may, if
elected by Lender in its discretion, bear interest at a rate per annum equal to
the Default Interest Rate, which rate adjustment shall be effective from the
date notice thereof is given by the Lender to the Borrower.
(c) Interest on the Revolving Credit Loans shall accrue from and
including the date of each such Loan to and excluding the date of any repayment
thereof; provided, however, if such Loan is repaid on the same day it is made,
one day's interest shall be paid on such Loan.
(d) The Lender, upon determining the Adjusted LIBOR for any
Interest Period applicable to the Revolving Credit Loans, shall promptly notify
by telephone (confirmed in writing) or in writing the Borrower thereof and any
such determination by the Lender shall, in the absence of manifest error, be
final, conclusive and binding for all purposes.
SECTION 2.3 REVOLVING CREDIT NOTE; REPAYMENT OF PRINCIPAL AND INTEREST.
(a) The Borrower's obligation to pay to the Lender the principal
of and interest on the Revolving Credit Loans shall be evidenced by the records
of the Lender (subject to Section 4.5 hereof) and by the Revolving Credit Note.
(b) The outstanding principal balance of the Revolving Credit
Loans shall be due and payable, together with all remaining accrued and unpaid
interest thereon, on the Revolving Credit Facility Expiration Date. Pending such
maturity, (i) accrued interest on the Revolving Credit Loans consisting of Prime
Rate Advances shall be payable to the Lender in arrears on the first (1st) day
of each calendar quarter, commencing with the calendar quarter following the
calendar quarter in which the initial Revolving Credit Loan is made hereunder
and continuing to be due on the same day of each succeeding calendar quarter
thereafter and (ii) accrued interest on the Revolving Credit Loans consisting of
LIBOR Advances shall be payable to the Lender in arrears on the last day of each
Interest Period applicable thereto and, in the case of any such LIBOR Advance
having an Interest Period in excess of three (3) months, on each day which
occurs every three (3) months after the initial date of such Interest Period.
SECTION 2.4 VOLUNTARY TERMINATION OR REDUCTIONS IN REVOLVING CREDIT
FACILITY. Upon at least thirty (30)
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days' prior written notice to the Lender, Borrower may, at its option, terminate
the Revolving Loan Facility in full or reduce the Revolving Credit Maximum
Availability in increments of not less than $100,000; provided, however, that
(i) the aggregate outstanding principal balance of the Revolving Credit Loans
shall not exceed the reduced amount of the Revolving Credit Maximum Availability
after giving effect to any such reduction (and Borrower shall immediately prepay
the Revolving Credit Loans to the extent necessary to eliminate such excess),
and (ii) any such termination or reduction shall be irrevocable.
SECTION 2.5 LETTERS OF CREDIT. If requested to do so by the Borrower,
Lender may, in its discretion, issue one or more Letters of Credit for the
account of such Borrower; provided, however, that the sum of the aggregate
outstanding principal balance of the Revolving Credit Loans at any one time plus
the aggregate stated amount of all such Letters of Credit then outstanding may
not exceed the Revolving Credit Maximum Availability and any amounts paid by
Lender with respect to any draw under any such Letter of Credit shall be deemed
to be a Revolving Credit Loan hereunder and shall bear interest and shall be
repayable in accordance with the terms hereof and of the Revolving Credit Note
unless such amount is immediately reimbursed by such Borrower on demand therefor
by Lender.
ARTICLE 3
TERM LOAN FACILITIES
SECTION 3.1 FIRST TERM LOAN FACILITY.
(a) Subject to the terms and conditions of this Agreement, the
Lender shall advance to the Borrower on the date hereof, a First Term Loan in
the principal amount of the First Term Loan Maximum Availability. The First Term
Loan Facility may not be repaid and then re-borrowed thereunder.
(b) The proceeds of the First Term Loan shall be used to refinance
the $10,400,000 outstanding principal balance of the Prior First Term Loan.
SECTION 3.2 SECOND TERM LOAN FACILITY.
(a) Subject to the terms and conditions of this Agreement, the
Lender agrees to advance to the Borrower, from time to time on or prior to the
Second Term Loan Facility Expiration Date and upon the Borrower's request
therefor, a Second Term Loan in a principal amount of up to the Second Term Loan
Maximum Availability. The Second Term Loan Facility may be disbursed in one or
more advances but the Lender's commitment under the Second Term Loan Facility
shall be reduced by each advance thereunder and any sums advanced under the
Second Term Loan Facility may not be repaid and then re-borrowed thereunder.
(b) The proceeds of the Second Term Loan shall be used (i) to
refinance the outstanding principal balance of the Prior Second Term Loan which
was used to purchase (A) the Warrants, (B) 500 shares of Series B Preferred
Stock of Gray, (C) 1,000 shares of Series A Preferred Stock of Gray, (D) the
Rawlings Warrant and (E) shares of common stock of Rawlings, (ii) to purchase
shares of common stock of Rawlings and shares of common stock of Host
Communications, and (iii) to make additional payments of the purchase price
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of the Rawlings Warrant.
SECTION 3.3 INTEREST ON TERM LOANS.
(a) The unpaid principal balance of each of the Term Loans shall
bear interest from time to time at a rate per annum equal to the Prime Rate plus
the Applicable Term Loan Margin therefor as then in effect; provided, however,
that Borrower may, by written notice (or by telephonic notice promptly confirmed
in writing) delivered to the Lender not later than 10:00 a.m. (Atlanta time) on
the second Business day prior to any Interest Period designated by the Borrower
in such notice, direct that interest accrue on the unpaid principal balance of
any Term Loan (or any portion thereof which when added to all other LIBOR
Advances then outstanding under any of the Loans and which have the same
Interest Period totals an amount of not less than $100,000 or any greater
integral multiple thereof) outstanding from time to time during such Interest
Period at a rate per annum equal to the sum of the Adjusted LIBOR for such
Interest Period plus the Applicable Term Loan Margin therefor as then in effect;
provided, further, however, that (i) upon the occurrence and during the
continuation of any Event of Default under Section 9.1(i), (ii) or (iii) hereof,
the Lender may, upon notice to the Borrower, suspend Borrower's right to use the
aforesaid Adjusted LIBOR option, (ii) Borrower may not have more than six (6)
Adjusted LIBOR-based interest rates in effect under this Section at any one
time, and (iii) the interest rate applicable to the Term Loans shall be subject
to adjustment as provided in paragraph (b) below.
(b) After the occurrence and during the continuation of any Event
of Default, the unpaid principal balance of any of the Term Loans (and, to the
extent permitted by applicable law, all accrued interest thereon) may, if
elected by the Lender in its discretion, bear interest at a rate per annum equal
to Default Rate, which rate adjustment shall be effective from the date notice
thereof is given by the Lender to the Borrower.
(c) Interest on each of the Term Loans shall accrue from and
including the date of each advance thereunder to and excluding the date of any
repayment thereof; provided, however, if such advance thereunder is repaid on
the same day it is made, one day's interest shall be paid on such advance.
(d) The Lender, upon determining the Adjusted LIBOR for any
Interest Period applicable to any Term Loan, shall promptly notify by telephone
(confirmed in writing) or in writing the Borrower thereof and any such
determination by the Lender shall, in the absence of manifest error, be final,
conclusive and binding for all purposes.
SECTION 3.4 TERM LOAN NOTES; REPAYMENT OF PRINCIPAL AND INTEREST.
(a) The Borrower's obligation to pay to the Lender the principal
of and interest on the First Term Loan shall be evidenced by the records of the
Lender (subject to Section 4.5 hereof) and by the First Term Loan Note. The
principal balance of the First Term Loan shall be due and payable on the
Maturity Date in an amount equal to the entire remaining unpaid principal
balance of the First Term Loan.
(b) The Borrower's obligation to pay to the Lender the principal
of and interest on the Second Term Loans shall be evidenced by the records of
the Lender (subject to Section 4.5 hereof) and by the Second
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Term Loan Note. The principal balance of the Second Term Loan shall be due and
payable on the Maturity Date in an amount equal to the entire remaining unpaid
principal balance of all outstanding Second Term Loans.
(c) Accrued interest on so much of any Term Loan as consists of
Prime Rate Advances shall be payable to the Lender in arrears on the first (1st)
day of each calendar quarter, commencing with the calendar quarter beginning
April 1, 1998, and continuing to be due on the same day of each calendar quarter
thereafter. Accrued interest on so much of any Term Loan as consists of LIBOR
Advances shall be payable to the Lender in arrears on the last day of each
Interest Period applicable thereto and, in the case of any LIBOR Advance having
an Interest Period in excess of three (3) months, on each day which occurs every
three (3) months after the initial date of such Interest Period. In all cases a
final payment equal to all remaining accrued but unpaid interest on each of the
Term Loans shall be due on the date on which the principal on such Term Loan is
due as provided above.
ARTICLE 4
GENERAL CREDIT TERMS
SECTION 4.1 CREDIT EXPIRATION DATES; EXTENSIONS. The Lender's obligations
hereunder to make any further advances under the Revolving Credit Facility, the
First Term Loan Facility and the Second Term Loan Facility shall expire on the
Revolving Credit Facility Expiration Date, the First Term Loan Facility
Expiration Date, and the Second Term Loan Facility Expiration Date,
respectively. If requested to do so by the Borrower, the Lender may, in its sole
discretion, grant one or more extensions of any of such dates, and, in the event
any such extension is requested by the Borrower and granted by the Lender in its
discretion, the Lender shall issue to the Borrower a written notification of
such extension.
SECTION 4.2 FEES. In consideration of the Lender's entering into this
Agreement and making the Loans available hereunder, the Borrower agrees to pay
to the Lender the following fees:
(a) Borrower shall pay to the Lender a non-refundable commitment
fee from the date of this Agreement to the date of the Revolving Credit Facility
Expiration Date computed on the daily average unused portion of the Revolving
Credit Maximum Availability in effect during the period for which such payment
is made at a rate per annum equal to one-quarter of one percent (0.25%), which
commitment fee shall be payable by Borrower to the Lender quarterly in arrears
on the first (1st) day of each calendar quarter, commencing with the calendar
quarter following the calendar quarter in which this Agreement is dated, and
continuing to be due on the first (1st) day of each succeeding calendar quarter
thereafter so long as the Revolving Credit Facility is in effect as well as on
the Revolving Credit Facility Expiration Date; and
(b) The Borrower shall pay to the Lender a letter of credit fee
equal to one and three-quarters percent (1.75%) per annum of the face amount of
each Letter of Credit. Such letter of credit fee shall be due and payable
quarterly in arrears on the first (1st) day of each calendar quarterly during
which a Letter of Credit was outstanding and, if then unpaid, on the Revolving
Credit Facility Expiration Date.
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SECTION 4.3 PAYMENTS; PREPAYMENTS AND COMPUTATIONS.
(a) Except as may be otherwise specifically provided herein, all
payments by the Borrower with respect to the Loans or any other Obligations
under this Agreement or any of the other Credit Documents shall be made without
defense, set-off or counterclaim to the Lender not later than 2:00 p.m. (Atlanta
time) on the date when due and shall be made in lawful money of the United
States of America in immediately available funds. Any payment received by Lender
on a non-Business Day or after 2:00 p.m. (Atlanta time) on any Business Day
shall be deemed received by Lender at the opening of its business on the next
Business Day. Whenever any payment to be made hereunder or under any of the
Notes or any of the other Credit Documents shall be stated to be due on a day
which is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the applicable rate during such extension.
(b) All computation of interest or fees due hereunder or under any
of the other Credit Documents shall be made on the basis of a year of 360 days
and the actual number of days elapsed.
(c) The Loans may be prepaid in whole or in part at any time
without premium or penalty; provided, however, that:
(i) A prepayment of a LIBOR Advance may be made without penalty by
Borrower only on the last day of the Interest Period applicable thereto
and, if any such prepayment is made on a day that is not the last day of
the applicable Interest Period, Borrower shall pay to the Lender such
compensation as may be due the Lender under Section 4.10 hereof; and
(ii) Any prepayment made on any Loan shall be applied, first, to
interest accrued thereon through the date of such prepayment, second, to
any compensation due under Section 4.10 below, and then to principal; and
(iii) in the event of any full or partial prepayment on any Term
Loan, Borrower must provide Lender with thirty (30) days prior irrevocable
written notice of the date and amount of such prepayment.
SECTION 4.4 COLLATERAL.
(a) The Obligations shall be secured by (i) the Borrower's
first-priority and perfected pledge to the Lender of (A) one hundred percent of
the outstanding capital stock of Datasouth, (B) 51.5 shares of common stock of
Capital Sports Properties, Inc. and (C) the Host Shares (other than 4,682 shares
of common stock of Host Communications which secure the Second Term Loan
Obligations), all pursuant to the Borrower Pledge Agreement, (ii) Datasouth's
first priority and perfected pledge to the Lender of 305,296 shares of Class A
Common Stock of Gray pursuant to the Subsidiary Pledge Agreement, and (iii) the
Partnership's first priority and perfected pledge to the Lender of 1,284,000
shares of common stock of the Borrower pursuant to the Partnership Pledge
Agreement.
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(b) The Second Term Loan Obligations shall be secured by (i)
Datasouth's first-priority and perfected pledge to the Lender of 906,294 shares
of Class A Common Stock of Gray pursuant to the Purpose Credit Subsidiary Pledge
Agreement and (ii) the Borrower's first-priority and perfected pledge to the
Lender of 1,000 shares of Series A Preferred Stock of Gray, 500 shares of Series
B Preferred Stock of Gray, the Warrants, the Rawlings Warrant, the Rawlings
Shares, and 4,682 shares of common stock of Host Communications, all pursuant to
the Purpose Credit Borrower Pledge Agreement.
(c) The Borrower shall cause the Purchaser to enter into the
Option Agreement with the Lender and to perform his obligations thereunder and
the Borrower, Datasouth and the Partnership shall execute the Acknowledgment,
Consent and Agreement attached thereto.
(d) The Borrower also shall (and shall cause each of Datasouth and
the Partnership to) execute or deliver to Lender any and all financing
statements, stock certificates, undated blank transfer powers and such other
documents as the Lender may reasonably request from time to time in order to
perfect or maintain the perfection of its Liens under the Pledge Agreements.
SECTION 4.5 LOAN ACCOUNT. The Lender shall open and maintain on its books
one or more loan accounts in the name of the Borrower and such loan account or
accounts shall show as debits thereto the Lender's Loans made to the Borrower
under this Agreement and as credits thereto all payments received by the Lender
and applied thereto so that the balance of the loan account or accounts of the
Borrower with the Lender at all times shall reflect the principal amount of the
Loans then outstanding from the Lender to the Borrower. The entries made in the
aforesaid loan account or accounts shall be PRIMA FACIE evidence, in the absence
of manifest error, of the existence and amounts of the Obligations of the
Borrower therein recorded and any payments thereon. The Lender will account to
the Borrower from time to time with periodic statements of borrowings, charges
and payments made pursuant to this Agreement and the other Credit Documents, and
each such account rendered by the Lender shall be deemed final, binding and
conclusive unless the Lender is notified by the Borrower in writing within
thirty (30) days after the date such account is so rendered that the Borrower
disputes any item thereof (but any such notice by the Borrower shall be deemed
an objection only to those items specifically set forth in such notice). Failure
by the Lender to render any such account shall in no way affect Lender's rights
hereunder or under any of the other Credit Documents.
SECTION 4.6 CAPITAL ADEQUACY. Without limiting any other provisions of this
Agreement, in the event that the Lender determines after the date hereof that
the introduction or change after the date of this Agreement of any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, or any change therein or in the interpretation or
application thereof after the date of this Agreement, or compliance by the
Lender with any request or directive regarding capital adequacy (whether or not
having the force of law and whether or not failure to comply therewith would be
unlawful) from a central bank or governmental authority or body having
jurisdiction which is introduced or changed after the date of this Agreement,
does or shall have the effect of reducing the rate of return on the Lender's
capital as a consequence of its obligations hereunder to a level below that
which the Lender could have achieved but for such law, treaty, rule, regulation,
guideline or order or such change or compliance (taking into consideration the
Lender's policies with respect to capital adequacy and assuming the full
utilization of the Lender's capital
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immediately before such adoption, change or compliance) by an amount reasonably
deemed by the Lender to be material, then the Lender shall promptly after its
determination of such occurrence notify the Borrower thereof. The Borrower
agrees to pay to the Lender as an additional fee from time to time, within ten
(10) days after written notice and demand by the Lender, such amount as the
Lender certifies to be the amount that will compensate it for such reduction in
connection with its obligations hereunder; provided, however, that Lender's
right to receive any such additional fee shall be subject to the provisions of
Section 4.12 hereof. A certificate of the Lender claiming compensation under
this Section 4.6 shall be conclusive in the absence of manifest error or fraud
and shall set forth the nature of the occurrence giving rise to such
compensation, the additional amount or amounts to be paid to it hereunder and
the method by which such amounts were determined. In determining such amount,
the Lender may use reasonable averaging and attribution methods.
SECTION 4.7 AGREEMENTS REGARDING INTEREST AND OTHER CHARGES. Borrower and
the Lender hereby agree that the only charges imposed or to be imposed by the
Lender upon Borrower for the use of money in connection with the Loans is and
will be the interest required to be paid under the provisions of this Agreement
as well as the related provisions of the Notes. In no event shall the amount of
interest due and payable under this Agreement, the Notes or any of the other
Credit Documents exceed the maximum rate of interest allowed by applicable law
and, in the event any such payment is made by the Borrower or any other Credit
Party or received by the Lender, such excess sum shall be credited as a payment
of principal. It is the express intent hereof that the Borrower not pay and the
Lender not receive, directly or indirectly or in any manner, interest in excess
of that which may be lawfully paid under applicable law. All interest and other
charges, fees or other amounts deemed to be interest which are paid or agreed to
be paid to the Lender under this Agreement, the Notes or any of the other Credit
Document shall, to the maximum extent permitted by applicable law, be amortized,
allocated and spread on a PRO RATA basis throughout the entire actual term of
the Loans (including any extension or renewal period). Any and all fees payable
hereunder are not intended, and shall not be deemed, to be interest or a charge
for the use of money, but rather shall constitute an "other charge" within the
meaning of O.C.G.A. ss. 7-4-2(a)(1).
SECTION 4.8 UNAVAILABILITY. If (i) the Lender determines that the making or
maintenance by it of any LIBOR Advance hereunder would violate any applicable
law, rule or regulation or the interpretation or application thereof (whether or
not having the force of law), or (ii) the Lender determines that deposits of a
type and maturity appropriate to fund interest rate options and Interest Periods
hereunder are not available in the London interbank market or that Adjusted
LIBOR does not fully reflect the Lender's cost of maintaining particular
interest rate options and/or Interest Periods hereunder, then the availability
of the Adjusted LIBOR-based interest rate option and/or Interest Periods
hereunder may be suspended by the Lender (by written notice to the Borrower) for
new Interest Periods until such time as market conditions or legal
considerations permit it to be reinstated.
SECTION 4.9 INCREASED COSTS. If, due to either (i) the introduction of or
any change (other than a change by way of imposition of or increase in reserve
requirements already included in computing the Adjusted LIBOR) in or in the
interpretation of any law or regulation after the date hereof or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority issued after the date hereof (whether or not having the
force of law), there shall be any increase in the cost to the Lender of agreeing
to
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make or making, funding or maintaining any LIBOR Advance hereunder, then within
ten (10) days after written notice and demand by the Lender, Borrower shall from
time to time pay to the Lender additional amounts as are sufficient to
compensate the Lender for such increased cost; provided, however, that Lender's
right to receive any such additional compensation shall be subject to the
provisions of Section 4.12 hereof. Each such notice and demand shall be
accompanied by a certificate of the Lender setting forth in reasonable detail
the basis for computing the additional amount claimed by the Lender, and each
such certificate shall, in the absence of manifest error, be conclusive evidence
of the amount of such cost.
SECTION 4.10 FUNDING LOSSES. The Borrower shall compensate the Lender, upon
its written request to the Borrower (which request shall set forth the basis for
requesting such amounts in reasonable detail and which request shall be made in
good faith and, absent manifest error, shall be final, conclusive and binding
upon all of the parties hereto), for all losses, expenses and liabilities
(including, without limitation, any interest paid by the Lender to lenders of
funds borrowed by it to make or carry its LIBOR Advances hereunder, in either
case to the extent not recovered by the Lender in connection with the
re-employment of such funds and including loss of anticipated profits), which
the Lender may sustain: (i) if for any reason (other than a default by the
Lender) a borrowing of any LIBOR Advance does not occur on the date specified
therefor in Borrower's request for such advance, (ii) if any repayment
(including any prepayment) of any LIBOR Advance occurs on a date which is not
the last day of an Interest Period applicable thereto, or (iii) if, for any
reason, the Borrower defaults in its obligation to repay its LIBOR Advances when
due as required by the terms of this Agreement.
SECTION 4.11 ASSUMPTIONS CONCERNING FUNDING OF LIBOR ADVANCES. Calculation
of all amounts payable to the Lender under this Agreement with respect to any
LIBOR Advance shall be made as though the Lender had actually funded its
relevant LIBOR Advances through the purchase of deposits in the relevant market
bearing interest at the rate applicable to such LIBOR Advance in an amount equal
to the amount of the LIBOR Advance and having a maturity comparable to the
relevant Interest Period and through the transfer of such LIBOR Advance from an
offshore office of the Lender to a domestic office of the Lender in the United
States of America; provided, however that the Lender may fund each of the LIBOR
Advances in any manner it sees fit and the foregoing assumption shall be used
only for calculation of amounts which may be payable under this Agreement.
SECTION 4.12 ADDITIONAL FEES OR COMPENSATION. Lender shall notify Borrower
of any event occurring after the date of this Agreement that will entitle the
Lender to additional fees or compensation under Section 4.6 or 4.9 hereof as
promptly as practical, but in any event within 45 days after the Lender obtains
actual knowledge thereof; provided, however, that if the Lender fails to give
such notice within 45 days after it obtains actual knowledge of such an event,
the Lender shall only be entitled to payment under Section 4.6 or 4.9 (as the
case may be) for reductions in the rate of return on the Lender's capital or for
increases in the Lender's costs (as the case may be) for periods from and after
the date 45 days prior to the date that the Lender does give such notice.
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ARTICLE 5
CONDITIONS PRECEDENT TO LOANS
The obligation of the Lender to make any Loan to Borrower hereunder shall
be subject to the satisfaction of the following conditions precedent:
SECTION 5.1 CONDITIONS PRECEDENT TO CLOSING. As of the date of this
Agreement, and subject to such exceptions as may be granted by Lender in its
discretion, the Lender shall have received the following (all documents to be in
form and substance satisfactory to the Lender):
(a) this Agreement and the Notes duly executed and delivered;
(b) the duly executed and delivered Pledge Agreements and Option
Agreement;
(c) all stock certificates evidencing the Pledged Shares together
with undated blank stock transfer powers for the same duly executed by the
appropriate Credit Parties, together with such other documents as the Lender may
deem necessary or appropriate to perfect or maintain the perfection of the
Lender's Liens under the Pledge Agreements;
(d) an Officer's Certificate of the Borrower certifying its
compliance with the financial and other covenants in this Agreement;
(e) copies of all documents and instruments, including all
consents, authorizations and filings, required under any Requirement of Law or
by any Contractual Obligation of any of the Credit Parties, in connection with
the execution, delivery, performance, validity and enforceability of the Credit
Documents and the other documents to be executed and delivered hereunder, and
such consents, authorizations, filings and orders shall be reasonably
satisfactory in form and substance to the Lender and shall be in full force and
effect and all applicable waiting periods shall have expired; and
(f) such other documents, certificates, approvals or filings as
the Lender may reasonably request.
SECTION 5.2 CONDITIONS PRECEDENT TO ALL LOANS. At the time of (and after
giving effect to) the making of any Loan under this Agreement, the following
conditions shall have been satisfied or shall exist:
(a) there shall then exist no Default or Event of Default;
(b) all representations and warranties by the Borrower or the
other Credit Parties contained herein or in the other Credit Documents shall be
true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such Loan,
except to the extent (i) previously fulfilled in accordance with the terms of
this Agreement or such other Credit Document, (ii) subsequently inapplicable, or
(iii) modified as a result of activities of such Credit Party or its
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Subsidiaries or changes in circumstances, in any case as permitted hereunder or
thereunder or consented to in accordance with the provisions hereof or thereof;
(c) since the date of the most recent financial statements
described in Section 6.2 or received pursuant to Section 7.1, there shall have
been no change which has had or will have a Material Adverse Effect;
(d) there shall be no action or proceeding instituted or pending
before any court or other governmental authority or, to the knowledge of the
Borrower, threatened (i) which has had or will have a Material Adverse Effect or
(ii) seeking to prohibit or restrict any Credit Party's ownership or operation
of any material portion of its business or assets or to compel any Credit Party
to dispose of or hold separate all or any material portion of its businesses or
assets, which has had or will have a Material Adverse Effect; and
(e) the Loan to be made and the use of proceeds thereof shall not
contravene, violate or conflict with, or involve any Credit Party or the Lender
in a violation of, any law, rule, injunction, or regulation, or determination of
any court of law or other governmental authority.
Each request for a Loan and the acceptance by the Borrower of the proceeds
thereof shall constitute a representation and warranty by the Borrower to the
Lender, as of the date of such Loan, that all of the conditions specified in
this Article have been satisfied.
SECTION 5.3 CONDITIONS PRECEDENT TO THE SECOND TERM LOANS. At the time of
(and after giving effect to) the making of any Second Term Loan, the following
conditions (in addition to all conditions set forth in Section 5.2 hereof) shall
have been satisfied or shall exist:
(a) Lender shall be satisfied that the Second Term Loans and the
use of proceeds thereof, comply in all respects with the Margin Regulations, and
Lender shall have received a duly executed Federal Reserve Form U-1, in form
acceptable to the Lender;
(b) Lender shall have received stock certificates evidencing all
Pledged Shares, acquired by Borrower but not previously pledged to Lender,
together with undated blank stock transfer powers for the same, duly executed by
the appropriate Credit Parties, together with such other documents as the Lender
may deem necessary or appropriate to perfect or maintain the perfection of the
Lender's Liens under the Pledge Agreements; and
(c) Lender shall have received such other documents and
certificates as the Lender may reasonably request.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES
Borrower (as to itself and as to all of the other Credit Parties) hereby
represents and warrants to the Lender as follows:
SECTION 6.1 ORGANIZATION; AUTHORIZATION; VALID AND BINDING OBLIGATIONS.
(a) The Borrower is a corporation duly organized and validly
existing in good standing under the laws of the jurisdiction of its
incorporation shown above. Each of Datasouth and the Partnership is a
corporation or partnership (as the case may be) duly organized and validly
existing in good standing under the laws of the jurisdiction in which it is
incorporated or organized (as the case may be).
(b) Each of the Borrower, Datasouth and the Partnership has all
requisite power and authority to execute and deliver the Credit Documents to
which it is a party, to perform its obligations under such Credit Documents and
to own its respective property and carry on its respective business. The Credit
Documents to which each of the Borrower, Datasouth and the Partnership is a
party have been duly authorized by all requisite corporate or partnership action
(as the case may be) on the part of such Credit Party and duly executed and
delivered by authorized officers or partners (as the case may be) of such Credit
Party.
(c) Each of the Credit Documents to which each Credit Party is a
party constitutes a valid obligation of such Credit Party, legally binding upon
and enforceable against such Credit Party in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally or by general principles of equity.
SECTION 6.2 FINANCIAL STATEMENTS. All of the financial statements for any
or all of the Credit Parties provided to the Lender in connection with this
Agreement fairly present the financial condition of such Credit Parties as at
the dates thereof and the results of their respective operations for the periods
covered thereby in conformity with GAAP (subject, in the case of interim
financial statements, to normal year-end adjustments). Since the date of the
most recent annual financial statements for Borrower presented to the Lender,
there has been no Material Adverse Effect.
SECTION 6.3 ACTIONS PENDING. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Borrower, threatened against any
of the Credit Parties, or any properties or rights of any of the Credit Parties,
by or before any court, arbitrator or administrative or governmental body which
has had or, if determined adversely, will have any Material Adverse Effect.
SECTION 6.4 CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the execution
nor delivery of this Agreement, nor fulfillment of or compliance with the terms
and provisions of this Agreement, will conflict with, or result in a breach of
the terms, conditions or provisions of, or constitute a default under, or result
in any violation of, or result in the creation of any Lien (other than any Lien
arising under any Credit Document) upon
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any of the properties or assets of any Credit Party pursuant to, the charter or
by-laws of any Credit Party, any award of any arbitrator or any agreement,
instrument, order, judgment, decree, statute, law, rule or regulation to which
any Credit Party or any of its property is subject.
SECTION 6.5 ERISA. Except as may have been expressly disclosed in writing
by Borrower to the Lender, no accumulated funding deficiency (as defined in
Section 302 of ERISA or Section 412 of the Code), whether or not waived, exists
with respect to any Credit Party's Plans (other than a Multiemployer Plan), no
liability to the PBGC has been or is expected to be incurred by any Credit Party
with respect to any Plan (other than a Multiemployer Plan) which has had or will
have a Material Adverse Effect, and none of the Credit Parties has incurred any
withdrawal liability under Title IV of ERISA with respect to any Multiemployer
Plan which has had or will have a Material Adverse Effect. The execution and
delivery of the Credit Documents will not involve any transaction which is
subject to any prohibitions of Section 406 of ERISA or in connection with which
a tax could be imposed pursuant to Section 4975 of the Code.
SECTION 6.6 GOVERNMENTAL CONSENT. Except for any recording or filing which
may be required by applicable law to perfect or maintain the perfection of the
Lender's Liens in the Collateral, no consent, approval or authorization of, or
declaration or filing with, any governmental authority is required for the valid
execution, delivery and performance by any Credit Party of the Credit Documents
executed by such Person or the consummation of any of the transactions
contemplated by the Credit Documents.
SECTION 6.7 MARGIN REGULATIONS AND INVESTMENT COMPANY ACT. ETC. No part of
the proceeds of any of the Loans will be used for any purpose which violates, or
which would be inconsistent or not in compliance with, the provisions of the
applicable Margin Regulations. No Credit Party is an "investment company" or a
company "controlled" by an "investment company (as each of the quoted terms is
defined or used in the Investment Company Act of 1940, as amended). No Credit
Party is subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, or any foreign, federal or local statute or
regulation (other than the Margin Regulations) limiting its ability to incur
indebtedness for money borrowed, to guarantee such indebtedness or to grant
Liens on any of its assets to secure such indebtedness, as contemplated by this
Agreement or by any other Credit Document.
SECTION 6.8 DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement furnished to the Lender by or on behalf of Borrower or
any other Credit Party in connection herewith contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not materially misleading. There is no
fact peculiar to Borrower or any of the other Credit Parties which had has a
Material Adverse Effect and which has not been set forth in this Agreement or in
the other documents, certificates and statements furnished to the Lender by or
on behalf of Borrower prior to the date hereof in connection with the
transactions contemplated hereby.
SECTION 6.9 REAFFIRMATION. Each request for a Loan made by Borrower
hereunder shall constitute (i) an automatic representation and warranty by
Borrower to Lender that there does not exist any Default or Event of Default as
of the date of such request as well as after giving effect to such Loan and (ii)
a reaffirmation as of the date of said request as well as after giving effect to
such Loan of all of the representations and
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warranties of the Borrower contained in this Agreement and the other Credit
Documents, except to the extent (a) previously fulfilled in accordance with the
terms of this Agreement or such other Credit Document, (b) subsequently
inapplicable, or (c) modified as a result of activities of the Borrower or its
Subsidiaries or changes in circumstances, in any case as permitted under this
Agreement or such other Credit Document or consented to in accordance with the
provisions hereof or thereof.
ARTICLE 7
AFFIRMATIVE COVENANTS
For so long as this Agreement is in effect, and unless the Lender expressly
consents in writing to the contrary, the Borrower covenants and agrees to comply
(and cause each of the other Credit Parties to comply) with the following
covenants:
SECTION 7.1 FINANCIAL STATEMENTS AND NOTICES. Borrower shall promptly
deliver to the Lender:
(a) within thirty (30) days after the end of each monthly
accounting period of Borrower, consolidated and consolidating statements of
income and cash flow of Borrower and its consolidated Subsidiaries for the
portion of Borrower's fiscal year ending therewith, and consolidated and
consolidating balance sheets of Borrower and its consolidated Subsidiaries as at
the end of such period, setting forth in the case of each such statement in
comparative form figures for the corresponding period in the preceding fiscal
year, all in reasonable detail, prepared in accordance with GAAP (subject to
changes resulting from normal year-end adjustments), but not audited;
(b) within forty-five (45) days after the end of each fiscal
quarter of Borrower, a duly completed and executed Officer's Certificate (in the
form provided by Lender to Borrower) certifying Borrower's compliance with the
financial and other covenants in this Agreement;
(c) within one hundred twenty (120) days after the end of each
fiscal year of Borrower, consolidated and consolidating statements of income and
cash flows of Borrower and its consolidated Subsidiaries for such year, and
consolidated and consolidating balance sheets of Borrower and its consolidated
Subsidiaries as at the end of such year, setting forth in each case in
comparative form corresponding figures from the preceding annual audit, all in
reasonable detail, prepared in accordance with GAAP and reasonably satisfactory
in scope to the Lender and audited in accordance with generally accepted
auditing standards and certified to Borrower by Ernst & Young or other
independent public accountants of recognized standing selected by Borrower and
reasonably acceptable to the Lender whose certificate shall be unqualified,
which financial statements shall be accompanied by a duly completed and executed
Officer's Certificate (in the form provided by Lender to Borrower) certifying
Borrower's compliance with the financial and other covenants in this Agreement;
(d) promptly upon receipt thereof, a copy of each other report
submitted to Borrower or any of its consolidated Subsidiaries by its independent
public accountants in connection with any annual, interim or special audit made
by them of the books of Borrower or any such Subsidiary (including, without
limitation, any
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management report prepared in connection with such accountants' annual audit of
Borrower and its consolidated Subsidiaries);
(e) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as Borrower shall
send to its public stockholders, if any, and copies of all registration
statements and all reports which Borrower files with the SEC (or any
governmental body or agency succeeding to the functions of the SEC);
(f) promptly upon obtaining knowledge of an Event of Default, an
Officer's Certificate specifying the nature and period of existence thereof and
what action the Borrower proposes to take with respect thereto;
(g) immediately upon becoming aware that the holder of any
evidence of indebtedness or any security of any Credit Party has given notice or
taken any other action with respect to a claimed default or event of default
with respect to such indebtedness or security or event which, with the giving of
notice or passage of time, or both, would constitute a default with respect to
such indebtedness or security, an Officer's Certificate specifying the notice
given or action taken by such holder and the nature of the claimed default or
event and what action such Credit Party is taking or proposes to take with
respect thereto, provided that in each and every case noted above the aggregate
outstanding principal balance of the indebtedness or security involved (or all
such indebtedness or securities combined) must equal or exceed $250,000;
(h) promptly after (x) the occurrence thereof, notice of the
institution by any Person of any action, suit or proceeding or any governmental
investigation or any arbitration, before any court or arbitrator or any
governmental or administrative body, agency, or official, against any Credit
Party, or any material property of any Credit Party, in which the amount in
controversy is stated to be more than $250,000 individually or in the aggregate
or, where no amount in controversy is stated, which might, if adversely
determined, have a Material Adverse Effect or (y) the receipt of actual
knowledge thereof, notice of the threat of any such action, suit, proceeding,
investigation or arbitration, each such notice under this subsection to specify,
if known, the amount of damages being claimed or other relief being sought, the
nature of the claim, the Person instituting the action, suit, proceeding,
investigation or arbitration, and any other significant features of the claim;
(i) promptly after learning thereof, notice of the occurrence of
any Reportable Event or any other act or condition arising in connection with
any Plan which Borrower believes might constitute grounds for the termination
thereof by the PBGC or for the appointment by any appropriate United States
district court of a trustee to administer such Plan;
(j) on or before May 1st of each calendar year (commencing May 1,
1998), a personal financial statement for Purchaser as of and for the 12-month
period ending on December 31 of the immediately preceding calendar year, which
statement shall include a balance sheet and income statement and shall be in
form and substance satisfactory to the Lender; and
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(k) with reasonable promptness, such other information relating to
the operations, management, business, properties or financial condition of any
Credit Party or relating to any Collateral or any Plan as the Lender may
reasonably request in writing from time to time.
SECTION 7.2 INSPECTION OF PROPERTY. On reasonable advance notice, each of
the Borrower and its Subsidiaries will permit any employee, consultants and
attorneys of Lender to visit and inspect any of the properties of such Credit
Party, to examine the corporate books and records of such Credit Party and such
other documents as the Lender may reasonably request and make copies thereof or
extracts therefrom, and to discuss the affairs, finances and accounts of any of
such corporations with the officers of such Credit Party and with such Credit
Party's independent public accountants, all at such reasonable times and as
often as the Lender may reasonably request.
SECTION 7.3 BOOKS AND RECORDS. Borrower shall keep (and shall cause each of
its Subsidiaries to keep) its books, records and accounts in accordance with
GAAP and practices applied on a basis consistent with preceding years.
SECTION 7.4 MAINTENANCE OF CORPORATE EXISTENCE. Except to the extent
otherwise permitted hereby, the Borrower will do or cause or cause to be done
all things reasonably necessary to preserve, renew and keep in full force and
effect the corporate legal existence of Borrower.
SECTION 7.5 FINANCIAL COVENANTS. Borrower shall comply with the following
financial covenants:
(a) Borrower's Net Worth shall not be less than $23,000,000 at any
time on or after December 31, 1997.
(b) As of the last day of each calendar quarter or year ending on
or after December 31, 1997, the Borrower's Leverage Ratio shall not be more than
(i) from December 31, 1997 through September 30, 1998, 2.5 to 1.0 and (ii) from
December 31, 1998 and thereafter, 2.0 to 1.0.
(c) As of the last day of each calendar quarter ending on or after
December 31, 1998, Borrower's Debt Service Ratio for the four quarter period
then ended shall not be less than 1.1 to 1.0.
(d) The value of all Collateral pledged to Lender hereunder shall
not be less than one hundred twenty-five percent (125%) of the then outstanding
principal balance of all Loans, at any time on or after December 31, 1997. For
purposes of this Section 7.5(d), the value of Collateral constituting Marketable
Securities shall be based upon the closing price on the applicable calculation
date for such Marketable Securities as quoted in The Wall Street Journal.
SECTION 7.6 PRIMARY DEPOSITORY RELATIONSHIPS. To the maximum extent
permitted by applicable law, the Borrower shall maintain its primary depository
relationships with the Lender.
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SECTION 7.7 INTEREST RATE CONTRACTS.
(a) Within six months from the date hereof, Borrower shall have
entered into one or more Interest Rate Contracts which fix or place a limit on
Borrower's interest obligations at interest rates acceptable to Lender with
respect to the Loans on an aggregate of not less than fifty percent (50%) of the
principal amount of the Loans then outstanding, such Interest Rate Contracts to
provide interest rate protection for a period of at least two (2) years from the
date of the Interest Rate Contract.
(b) All obligations of Borrower to Lender or any of Lender's
Affiliates, pursuant to any Interest Rate Contract, shall be deemed to be part
of the Obligations.
SECTION 7.8 MARGIN CALL.
(a) As of the last day of each calendar month, commencing on the
last day of the calendar month in which the Options set forth in the Option
Agreement expire or are exercised (the "Margin Calculation Dates"), the market
value on such Margin Calculation Date of all of the Marketable Securities then
pledged to the Lender as security for the Loans shall not be less than two
hundred percent (200%) of the outstanding principal balance of the Loans on such
Margin Calculation Date. For purposes of this Section 7.8(a), the value of
Marketable Securities shall be based upon the closing price on the Margin
Calculation Date for such Marketable Securities as quoted in The Wall Street
Journal.
(b) If at any time, the condition set forth in Section 7.8(a) is
not satisfied, then the Borrower shall, within ten (10) days after written
notice from the Lender and to the extent necessary to satisfy the condition set
forth in Section 7.8(a), either (i) prepay the Loans or (ii) pledge to the
Lender additional shares of Class A Common Stock of Gray or other Collateral as
shall be satisfactory to the Lender in its sole discretion.
SECTION 7.9 NOTICES REGARDING PURCHASER.
The Borrower shall provide written notice to the Lender of the
death of the Purchaser within thirty (30) days of the Borrower's knowledge of
such death and shall provide written notice to the Lender of the name and
address of any new executor of the Purchaser's estate with ten (10) Business
Days after the Borrower's knowledge of the appointment of such new executor.
ARTICLE 8
NEGATIVE COVENANTS
For so long as this Agreement is in effect, and unless the Lender expressly
consents in writing to the contrary, the Borrower covenants and agrees to comply
(and cause each of the other Credit Parties to comply) with the following
covenants:
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SECTION 8.1 MERGER, CONSOLIDATION, ETC. Neither Borrower nor Datasouth will
merge, consolidate or exchange shares with any other corporation, or sell, lease
or transfer or otherwise dispose of all or substantially all of its assets to
any Person, except that: (i) Datasouth may merge or consolidate with the
Borrower if the Borrower shall be the surviving corporation and (ii) any Person
may merge or consolidate with Borrower or Datasouth if no other Default or Event
of Default shall be caused thereby and Borrower or Datasouth shall be the
surviving corporation therefrom.
SECTION 8.2 ERISA MATTERS. Neither Borrower nor any of the other Credit
Parties shall incur or suffer to exist any material accumulated funding
deficiency within the meaning of ERISA or incur any material liability to the
PBGC established under ERISA (or any successor thereto under ERISA) or otherwise
take or fail to take any action with respect to any Plan where such action or
failure has had or will result in a Material Adverse Effect.
SECTION 8.3 FISCAL YEAR CHANGE. Borrower shall not change its fiscal year
end from December 31.
SECTION 8.4 USE OF PROCEEDS. Borrower shall not use the proceeds of any of
the Loans for any purpose other than as and to the extent permitted by the
applicable provisions of Section 2.1, 3.1 or 3.2 hereof. Notwithstanding
anything herein to the contrary, none of the proceeds of the Revolving Credit
Loans or the First Term Loan shall be used to finance or refinance the purchase
or carry of any "margin stock" (as defined in the Margin Regulations).
ARTICLE 9
EVENTS OF DEFAULT
SECTION 9.1 EVENTS OF DEFAULT. Each of the following events shall
constitute an Event of Default under this Agreement:
(i) failure by Borrower to pay any of the Obligations (whether
principal, interest, fees or other amounts) when and as the same become due
and payable (whether at maturity, on demand, or otherwise), and, in the
case of any failure to pay any interest or fees due hereunder, the
continuation of such failure for fifteen (15) days after the due date of
such payment; or
(ii) any Credit Party shall (1) apply for or consent to the
appointment of or the taking of possession by a receiver, custodian,
trustee or liquidator of such Credit Party or of all or a substantial part
of the property of such Credit Party, (2) admit in writing the inability of
such Credit Party, or be generally unable, to pay the debts of such Credit
Party as such debts become due, (3) make a general assignment for the
benefit of the creditors of such Credit Party, (4) commence a voluntary
case under the Bankruptcy Code (as now or hereafter in effect), (5) file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of
debts, (6) fail to controvert in a timely or appropriate manner, or
acquiesce in writing to, any petition filed against such Credit Party in an
involuntary case under the Bankruptcy Code, or (7) take any action for the
purpose of effecting any of the foregoing; or
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(iii) a proceeding or case shall be commenced, without the
application of any Credit Party, in any court of competent jurisdiction,
seeking (1) the liquidation, reorganization, dissolution, winding-up or
composition or readjustment of debts of such Credit Party, (2) the
appointment of a trustee, receiver, custodian, liquidator or the like of
such Credit Party or of all or any substantial part of the assets of such
Credit Party, or (3) similar relief in respect of such Credit Party under
any law relating to bankruptcy, insolvency, reorganization, winding-up or
composition and adjustment of debts, and such proceeding or case shall
continue undismissed, or an order, judgment or decree approving or ordering
any of the foregoing shall be entered and continue in effect, for a period
of sixty (60) days from commencement of such proceeding or case or the date
of such order, judgment or decree, or any order for relief against such
Credit Party shall be entered in an involuntary case or proceeding under
the Bankruptcy Code; or
(iv) any representation or warranty made by Borrower herein or by
any Credit Party in any of the other Credit Documents shall be false or
misleading in any material respect on the date as of which made (or deemed
made); or
(v) any default shall occur in the performance or observance of
any term, condition or provision contained in Section 7.5 or Article VIII
of this Agreement; or
(vi) any default shall occur in the performance or observance of
any term, condition or provision contained in this Agreement and not
referred to in clauses (i) through (v) above, which default shall continue
for thirty (30) days after the earlier of the date Borrower acquires
knowledge thereof or the Lender gives Borrower written notice thereof; or
(vii) any material provision of this Agreement or any other Credit
Document shall at any time for any reason cease to be valid and binding in
accordance with its terms on Borrower or any other Credit Party which
executed it, or the validity, enforceability, or priority thereof shall be
contested by Borrower or any other Credit Party, or Borrower or any other
Credit Party shall terminate or repudiate (or attempt to terminate or
repudiate) any Credit Document executed by it; or
(viii) the occurrence of an Event of Default under (and after
giving effect to any notice and/or cure rights expressly provided in) any
of the other Credit Documents; or
(ix) default in the payment of principal of or interest on any
other obligation of any Credit Party for money borrowed (or any obligation
under conditional sale or other title retention agreement or any obligation
secured by purchase money mortgage or deed to secure debt or any obligation
under notes payable or drafts accepted representing extensions of credit or
on any Capitalized Lease Obligation), or default in the performance of any
other agreement, term or condition contained in any indenture or agreement
under which any such obligation is created, guaranteed or secured if the
effect of such default is to cause such obligation to become due prior to
its stated maturity; provided that in each and every case noted above the
aggregate then outstanding principal balance of the obligation involved (or
all such obligations combined) must equal or exceed $250,000; or
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(x) default in the payment of principal of or interest on any
obligation of any Credit Party for money borrowed or equipment leased from
the Lender or any Affiliate of the Lender (other than an Obligation) or
default in the performance of any other agreement, term, or condition
contained in any agreement under which any such obligation is created,
guaranteed or secured if the effect of such default is to entitle the
Lender to then cause such obligation to become due prior to its stated
maturity, even if such default would not constitute an Event of Default
under paragraph (ix) immediately above; or
(xi) a judgment or order for the payment of money in excess of
$250,000 or otherwise having a Material Adverse Effect shall be rendered
against any Credit Party and such judgment or order shall not be released,
vacated, stayed or fully bonded-off within thirty (30) days after the date
of its issue or entry; or
(xii) a Reportable Event shall occur which the Lender determines
in good faith constitutes grounds for the termination by the PBGC of any
Plan or for the appointment by the appropriate United States district court
of a trustee for any Plan, or if any Plan shall be so terminated or any
such trustee shall be so requested or appointed, or if the Borrower or any
of the other Credit Parties is in "default" (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan
resulting from such Credit Party's complete or partial withdrawal from such
Plan; or
(xiii) the acquisition after the date of this Agreement by any
Person, or by any two or more Persons acting in concert, of beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission) of fifteen percent (15%) of the outstanding Voting Stock of the
Borrower; or
(xiv) the aggregate value of all of Purchaser's unpledged and
non-affiliated Marketable Securities shall be less than $35,000,000; or
(xv) the aggregate value of Purchaser's unpledged and
non-affiliated Marketable Securities which constitute capital stock of
Wachovia Bank shall be less than $20,000,000.
SECTION 9.2 REMEDIES. Upon the occurrence of an Event of Default, the
Lender may, in its discretion, exercise one or more of the following remedies:
(i) by written notice to Borrower, terminate the Lender's
remaining commitment hereunder to make any further Loans to Borrower,
whereupon any such commitment shall terminate immediately and any remaining
accrued but unpaid commitment fees shall become forthwith due and payable
by Borrower to Lender without any other notice or demand of any kind; and
(ii) by written notice to the Borrower, declare the principal of
and any accrued interest on the Notes and all other Obligations, to be, and
whereupon the same shall become, immediately due and payable, and the same
shall thereupon become due and payable without further demand, presentment,
protest or notice of any kind, all of which are hereby expressly waived by
the Borrower; and
30
<PAGE>
(iii) exercise all or any of its rights and remedies as it may
otherwise have under any of the other Credit Documents or any applicable
law;
provided, however, that upon the occurrence of an Event of Default specified in
Section 9.1(ii) or Section 9.1(iii) above, the result which would occur upon the
giving of notice pursuant to Section 9.2(i) and (ii) shall occur automatically
without the giving of any such notice. No failure or delay on the part of the
Lender to exercise any right or remedy hereunder or under the Credit Documents
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right or remedy hereunder preclude any further exercise thereof or the
exercise of any further right or remedy hereunder or under the Credit Documents.
No exercise by the Lender of any remedy under the other Credit Documents shall
operate as a limitation on any rights or remedies of the Lender under this
Agreement, except to the extent of moneys actually received by the Lender under
the other Credit Documents.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1 NOTICES. All notices, requests and other communications
hereunder or under any of the other Credit Documents shall be in electronic,
telephonic (confirmed in writing) or written (including telecopier or similar
writing) form and shall be given to the party to whom sent, addressed to it at
its address set forth beneath its signature below. Each such notice, request or
communication shall be effective (i) if given by telecopy, when such
communication is transmitted to the telecopy number herein specified (any such
notice, request or communication sent by telecopy shall be confirmed promptly
thereafter by personal delivery or mailing in accordance with the other
provisions of this Section, but such confirmation requirement shall not affect
the date on which such telecopy shall be deemed to be effective for purposes
hereof), (ii) if given by mail, three (3) Business Days after such communication
is deposited in the United States mail with first class postage prepaid, return
receipt requested, addressed as aforesaid, (iii) if sent for overnight delivery
by Federal Express or other reputable national overnight delivery service, one
(1) Business Day after such communication is entrusted to such service for
overnight delivery and with recipient's signature required, addressed as
aforesaid, or (iv) if given by any other means, when delivered at the address of
the party to whom such notice is being delivered.
SECTION 10.2 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of the Lender in exercising any right or remedy hereunder and no course of
dealing between any Credit Party and the Lender shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right or remedy hereunder. The rights and remedies herein expressly
provided are cumulative and not exclusive of any rights or remedies which the
Lender would otherwise have. No notice to or demand on any Credit Party not
required hereunder or under any other Credit Document in any case shall entitle
any Credit Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Lender to any other or
further action in any circumstances without notice or demand.
31
<PAGE>
SECTION 10.3 PAYMENT OF EXPENSES; INDEMNITY.
(a) Borrower agrees to: (i) pay all reasonable out-of-pocket costs
and expenses of the Lender incurred in connection with its negotiation,
structuring, documenting, closing, administration or modification of, or in
connection with the preservation of Lender's rights under, enforcement of, or
any refinancing, renegotiation, restructuring or termination of, this Agreement
or any other Credit Document or any instrument referred to therein or any
amendment, waiver or consent relating thereto, including, without limitation,
the actual and reasonable fees and disbursements of counsel for the Lender, and
(ii) pay and hold the Lender harmless from and against any and all present and
future stamp, documentary, property, ad valorem or other similar non-income
taxes with respect to this Agreement, any Note or any other Credit Documents,
any Collateral described therein, or any payments due thereunder, and save the
Lender harmless from and against any and all liabilities with respect to or
resulting from any delay or omission to pay such taxes.
(b) In addition to the other amounts payable by the Borrower under
this Agreement (including, without limitation, subsection (a) above), the
Borrower hereby agrees to pay and indemnify the Lender from and against all
claims, liabilities, losses, costs and expenses (including, without limitation,
actual and reasonable attorneys' fees and expenses) which the Lender may (other
than as a result of the gross negligence or willful misconduct of such Person)
incur or be subjected to as a consequence, directly or indirectly, of (i) any
actual or proposed use of any proceeds of the Loans or any Credit Party's
entering into or performing under any Credit Document, (ii) any breach by any
Credit Party of any representation, warranty, covenant or condition in, or the
occurrence of any other default under, this Agreement or any of the other Credit
Documents, including without limitation all reasonable attorney's fees or
expenses resulting from the settlement or defense of any claims or liabilities
arising as a result of any such breach or default, (iii) allegations of
participation or interference by the Lender in the management, contractual
relations or other affairs of any Credit Party, (iv) the Lender's holding any
Lien on or administering any of the Collateral, (v) allegations that the Lender
has joint liability with any Credit Party to any third party for any reason, or
(vi) any suit, investigation or proceeding as to which the Lender is involved as
a consequence, directly or indirectly, of its execution of this Agreement or any
of the other Credit Documents, the making of any Loan, the holding of any Lien
on any of the Collateral or any other event or transaction contemplated by this
Agreement or any of the Credit Documents.
SECTION 10.4 SUCCESSORS AND ASSIGNS: SALE OF INTEREST. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by the respective
successors and permitted assigns of the parties hereto; provided that Borrower
may not assign or transfer any of its rights or obligations hereunder without
the prior written consent of the Lender. Lender may sell, assign or grant
participations in all or any part of Lender's rights, titles or interests
hereunder and under the other Credit Documents without the prior written consent
of the Borrower.
SECTION 10.5 AMENDMENTS. No amendment or waiver of any provision of this
Agreement or the other Credit Documents, nor consent to any departure by any
party hereto, or any other Credit Party therefrom, shall in any event be
enforceable against any party to this Agreement unless the same shall be in
writing and signed
32
<PAGE>
by such party, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 10.6 TIME OF ESSENCE. Time is of the essence of this Agreement and
each of the other Credit
Documents.
SECTION 10.7 GOVERNING LAW. This Agreement is intended to be performed in
the State of Georgia, and shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the laws of the State of
Georgia without regard to principles of conflicts of laws thereof.
SECTION 10.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
SECTION 10.9 EFFECTIVENESS; SURVIVAL.
(a) This Agreement shall become effective on the date on which all
of the parties hereto shall have signed a copy hereof (whether the same or
different copies) and the Lender shall have received the same.
(b) All representations and warranties made herein, in the
certificates, reports, notices, and other documents delivered pursuant to this
Agreement shall survive the execution and delivery of this Agreement, the other
Credit Documents, and such other agreements and documents, the making of the
Loans hereunder and the execution and delivery of the Notes.
SECTION 10.10 SEVERABILITY. In case any provision in or Obligation under
this Agreement or the other Credit Documents shall be invalid, illegal or
unenforceable, in whole or in part, in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 10.11 INDEPENDENCE OF COVENANTS. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitation of, another covenant, shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
SECTION 10.12 HEADINGS DESCRIPTIVE. The headings of the several sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
SECTION 10.13 TERMINATION OF AGREEMENT. At such time as (i) Lender is no
longer obligated under this Agreement (whether by the terms hereof or as a
result of a release of such obligations by the Borrower) to make any further
Loans, (ii) no Letters of Credit are outstanding, and (iii) all Obligations have
been paid and satisfied in full, this Agreement shall terminate; provided,
however, that any and all indemnity obligations of
33
<PAGE>
any Credit Party to the Lender arising hereunder or under any of the other
Credit Documents shall survive the termination of this Agreement.
SECTION 10.14 ENTIRE AGREEMENT. This Agreement and the other Credit
Documents constitute the entire agreement among the Credit Parties and the
Lender with respect to the Loans, the other Obligations and the Collateral and
supersede all prior agreements, representations and understandings related to
such subject matters.
SECTION 10.15 JURY TRIAL WAIVER; CONSENT TO FORUM.
(a) THE BORROWER AND THE LENDER IRREVOCABLY WAIVE ALL RIGHT OF
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS OR ANY
MATTER ARISING HEREUNDER OR THEREUNDER.
(b) ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OF THE OTHER CREDIT DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING
FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE
WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE
LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL
DISPUTES OF J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE
"SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL
RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY
COURT HAVING JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION,
INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY
CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING
JURISDICTION OVER SUCH ACTION.
(i) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN
THE COUNTY OF THE BORROWER'S DOMICILE AT TIME OF THE EXECUTION OF THIS AGREEMENT
AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS
UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE
AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE
COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR
SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF
SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
(ii) RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION
PROVISION SHALL BE DEEMED TO (A) LIMIT THE APPLICABILITY OF ANY OTHERWISE
APPLICABLE STATUES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS
AGREEMENT OR IN ANY OF THE OTHER CREDIT DOCUMENTS; OR (B) BE A WAIVER BY THE
LENDER OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (C) LIMIT THE RIGHT OF THE LENDER HERETO
(1) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (2)
34
<PAGE>
TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (3) TO OBTAIN
FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO)
INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE
LENDER MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR
OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE
PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT.
NEITHER THIS EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE
OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL
CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY
SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING
RESORT TO SUCH REMEDIES.
35
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered on their behalf and each of the Borrower has caused
its corporate seal to be hereunto affixed, all as of the date first above
stated.
BORROWER:
(CORPORATE SEAL)
BULL RUN CORPORATION
By: /s/ ROBERT S. PRATHER, JR.
Name: Robert S. Prather, Jr.
Title: President
Address for Notices:
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319-3099
Attn: President
Telecopy: (404) 261-9607
LENDER:
NATIONSBANK, N.A.
By: /s/ MELINDA M. BERGBOM
Name: Melinda M. Bergbom
Title: Senior Vice President
Address for Notices:
19th Floor, 600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attn: Melinda M. Bergbom
Telecopy: (404) 607-6343
EXHIBIT 10.2
FIRST TERM LOAN NOTE
$10,400,000 MARCH 20, 1998
FOR VALUE RECEIVED, the undersigned, BULL RUN CORPORATION, a Georgia
corporation (the "Borrower"), hereby promises to pay to the order of
NATIONSBANK, N.A. (herein, together with any subsequent holder hereof, called
the "Lender"), the principal sum of TEN MILLION FOUR HUNDRED THOUSAND AND NO/100
DOLLARS ($10,400,000) , which principal sum shall be payable (i) in a single
installment on the Maturity Date or (ii) on any earlier date on which all
amounts outstanding under this First Term Loan Note (this "Note") have become
due and payable pursuant to the provisions of Section 9.02 of the Loan
Agreement. The Borrower likewise promises to pay interest on the outstanding
principal balance of the First Term Loan made by the Lender to the Borrower, at
such interest rates, payable at such times, and computed in such manner, as are
specified in the Loan Agreement in strict accordance with the terms thereof.
This Note is issued pursuant to, and is the First Term Loan Note referred
to in the Amended and Restated Loan Agreement dated as of March 20, 1998,
between the Borrower and the Lender (as the same may be further amended or
supplemented from time to time, the "Loan Agreement"), and the Lender is and
shall be entitled to all benefits thereof and of all the other Credit Documents
executed and delivered to the Lender in connection therewith. Terms defined in
the Loan Agreement are used herein with the same meaning. The Loan Agreement,
among other things, contains provisions for acceleration of the maturity hereof
upon the happening of certain Events of Default, provisions relating to
prepayments on account of principal hereof prior to the maturity hereof, and
provisions for post-default interest rates.
The Borrower agrees to make payments of principal and interest hereon on
the dates and in the amounts specified in the Loan Agreement in strict
accordance with the terms thereof.
In case an Event of Default shall occur and be continuing, the principal
and all accrued interest of this Note may automatically become, or may be
declared, immediately due and payable in the manner and with the effect provided
in the Loan Agreement. The Borrower agrees to pay, and save the Lender harmless
against any liability for the payment of, all costs and expenses, including
actual and reasonable attorneys' fees, arising in connection with the
enforcement by the Lender of any of its rights or remedies under this Note or
the Loan Agreement.
This Note has been delivered in Atlanta, Georgia, and the rights and
obligations of the Lender and the Borrower hereunder shall be construed in
accordance with and governed by the laws of the State of Georgia (without giving
effect to its conflicts of law rules).
The Borrower expressly waives any presentment, demand, protest or notice in
connection with this Note, whether now or hereafter required by applicable law.
This Note is intended to be an instrument under seal.
<PAGE>
THIS NOTE IS MADE AND GIVEN IN REPLACEMENT OF THAT CERTAIN FIRST TERM LOAN NOTE
EXECUTED ON JANUARY 3, 1996 IN THE ORIGINAL PRINCIPAL AMOUNT OF $10,400,000
ISSUED BY THE BORROWER IN FAVOR OF THE LENDER, AND IS NOT INTENDED TO BE A
NOVATION.
IN WITNESS WHEREOF, the Borrower has caused this Note to be
executed, sealed and delivered by its duly authorized officer as of the date
first above written.
BULL RUN CORPORATION
(CORPORATE SEAL)
By: /s/ FREDERICK J. ERICKSON
Name: Frederick J. Erickson
Title: VP - Finance
EXHIBIT 10.3
SECOND TERM LOAN NOTE
$32,500,000 MARCH 20, 1998
FOR VALUE RECEIVED, the undersigned, BULL RUN CORPORATION, a
Georgia corporation (the "Borrower"), hereby promises to pay to the order of
NATIONSBANK, N.A. (herein, together with any subsequent holder hereof, called
the "Lender"), the principal sum of THIRTY-TWO MILLION FIVE HUNDRED THOUSAND AND
NO/100 DOLLARS ($32,500,000), or the outstanding principal amount of the Second
Term Loans made to the Borrower by the Lender pursuant to the Loan Agreement
referred to below, which principal sum shall be payable (i) in a single
installment on the Maturity Date or (ii) on any earlier date on which all
amounts outstanding under this Second Term Loan Note (this "Note") have become
due and payable pursuant to the provisions of Section 9.02 of the Loan
Agreement. The Borrower likewise promises to pay interest on the outstanding
principal balance of the Second Term Loan made by the Lender to the Borrower, at
such interest rates, payable at such times, and computed in such manner, as are
specified in the Loan Agreement in strict accordance with the terms thereof.
This Note is issued pursuant to, and is the Second Term Loan Note
referred to in the Amended and Restated Loan Agreement dated as of March 20,
1998, between the Borrower and the Lender (as the same may be further amended or
supplemented from time to time, the "Loan Agreement"), and the Lender is and
shall be entitled to all benefits thereof and of all the other Credit Documents
executed and delivered to the Lender in connection therewith. Terms defined in
the Loan Agreement are used herein with the same meaning. The Loan Agreement,
among other things, contains provisions for acceleration of the maturity hereof
upon the happening of certain Events of Default, provisions relating to
prepayments on account of principal hereof prior to the maturity hereof, and
provisions for post-default interest rates.
The Borrower agrees to make payments of principal and interest
hereon on the dates and in the amounts specified in the Loan Agreement in strict
accordance with the terms thereof.
In case an Event of Default shall occur and be continuing, the
principal and all accrued interest of this Note may automatically become, or may
be declared, immediately due and payable in the manner and with the effect
provided in the Loan Agreement. The Borrower agrees to pay, and save the Lender
harmless against any liability for the payment of, all costs and expenses,
including actual and reasonable attorneys' fees, arising in connection with the
enforcement by the Lender of any of its rights or remedies under this Note or
the Loan Agreement.
This Note has been delivered in Atlanta, Georgia, and the rights
and obligations of the Lender and the Borrower hereunder shall be construed in
accordance with and governed by the laws of the State of Georgia (without giving
effect to its conflicts of law rules).
<PAGE>
The Borrower expressly waives any presentment, demand, protest or
notice in connection with this Note, whether now or hereafter required by
applicable law. This Note is intended to be an instrument under seal.
THIS NOTE IS MADE AND GIVEN IN REPLACEMENT OF (1) THAT CERTAIN SECOND TERM LOAN
NOTE EXECUTED ON JANUARY 3, 1996 IN THE ORIGINAL PRINCIPAL AMOUNT OF
$13,100,000, (2) THAT CERTAIN THIRD TERM LOAN NOTE EXECUTED ON SEPTEMBER 24,
1997 IN AN ORIGINAL PRINCIPAL AMOUNT OF $5,000,000, (3) THAT CERTAIN FOURTH TERM
LOAN NOTE EXECUTED ON NOVEMBER 21, 1997 IN AN ORIGINAL PRINCIPAL AMOUNT OF
$1,400,000, (4) THOSE CERTAIN ADDITIONAL TERM LOAN NOTES EXECUTED ON THE
FOLLOWING DATES AND IN THE FOLLOWING AMOUNTS:
DATE AMOUNT
---- ------
DECEMBER 2, 1997 $ 902,503.00
DECEMBER 10, 1997 $ 457,509.00
DECEMBER 12, 1997 $ 1,197,631.00
JANUARY 6, 1998 $ 723,452.50
JANUARY 16, 1998 $ 881,327.50
JANUARY 22, 1998 $ 1,060,442.00;
AND (5) THOSE CERTAIN UNSECURED NOTES EXECUTED ON THE FOLLOWING DATES AND IN THE
FOLLOWING AMOUNTS:
DATE AMOUNT
---- ------
DECEMBER 15, 1997 $ 686,099.75
DECEMBER 24, 1997 $ 583,184.00
JANUARY 9, 1998 $ 2,965,446.50
EACH ISSUED BY THE BORROWER IN FAVOR OF THE LENDER, AND IS NOT INTENDED TO BE A
NOVATION.
IN WITNESS WHEREOF, the Borrower has caused this Note to be
executed, sealed and delivered by its duly authorized officer as of the date
first above written.
BULL RUN CORPORATION
(CORPORATE SEAL)
By: /s/ FREDERICK J. ERICKSON
Name: Frederick J. Erickson
Title: VP - Finance
EXHIBIT 10.3
REVOLVING CREDIT NOTE
$3,500,000 MARCH 20, 1998
FOR VALUE RECEIVED, the undersigned BULL RUN CORPORATION, a
Georgia corporation (the "Borrower"), hereby promises to pay to the order of
NATIONSBANK, N.A. (herein, together with any subsequent holder hereof, called
the "Lender"), the principal sum of THREE MILLION FIVE HUNDRED THOUSAND AND
NO/100 DOLLARS ($3,500,000), or the aggregate outstanding principal amount of
the Revolving Credit Loans made to the Borrower by Lender pursuant to the Loan
Agreement referred to below, which principal sum shall be payable on the earlier
of (i) the Revolving Credit Facility Expiration Date set forth in the Loan
Agreement or (ii) the date on which all amounts outstanding under this Revolving
Credit Note (the "Note") have become due and payable pursuant to the provisions
of Section 9.02 of the Loan Agreement. The Borrower likewise promises to pay
interest on the outstanding principal balance of each Revolving Credit Loan made
by the Lender to the Borrower, at such interest rates, payable at such times,
and computed in such manner, as are specified in the Loan Agreement in strict
accordance with the terms thereof.
This Note is issued pursuant to, and is the Revolving Credit Note
referred to in, the Amended and Restated Loan Agreement dated as of March 20,
1998, between Borrower and Lender (as the same may be amended from time to time,
the "Loan Agreement"), and the Lender is and shall be entitled to all benefits
thereof and of all the other Credit Documents executed and delivered to the
Lender in connection therewith. Terms defined in the Loan Agreement are used
herein with the same meaning. The Loan Agreement, among other things, contains
provisions for acceleration of the maturity hereof upon the happening of certain
Events of Default, provisions relating to repayments on account of principal
hereof prior to the maturity hereof, and as provisions for post-default interest
rates.
The Borrower agrees to make payments of principal and interest
hereon on the dates and in the amounts specified in the Loan Agreement in strict
accordance with the terms thereof.
In case an Event of Default shall occur and be continuing, the
principal and all accrued interest of this Note may automatically become, or may
be declared, immediately due and payable in the manner and with the effect
provided in the Loan Agreement. The Borrower agrees to pay, and save the Lender
harmless against any liability for the payment of, all costs and expenses,
including actual and reasonable attorneys' fees, arising in connection with the
enforcement by the Lender of any of its rights or remedies under this Note or
the Loan Agreement.
This Note has been delivered in Atlanta, Georgia, and the rights
and obligations of the Lender and the Borrower hereunder shall be construed in
accordance with and governed by the laws of the State of Georgia (without giving
effect to its conflicts of law rules).
The Borrower expressly waives any presentment, demand, protest or
notice in connection with this Note, whether now or hereafter required by
applicable law. This Note is intended to be an instrument under seal.
<PAGE>
THIS NOTE IS MADE AND GIVEN IN REPLACEMENT OF THAT CERTAIN PROMISSORY NOTE
EXECUTED ON JANUARY 27, 1997 IN THE ORIGINAL PRINCIPAL AMOUNT OF $3,500,000,
ISSUED BY THE BORROWER TO THE LENDER, AND IS NOT INTENDED TO BE A NOVATION.
IN WITNESS WHEREOF, the Borrower has caused this Note to be
executed, sealed and delivered by its duly authorized officer as of the date
first above written.
BULL RUN CORPORATION
(CORPORATE SEAL)
By: /s/ FREDERICK J. ERICKSON
Name: Frederick J. Erickson
Title: VP - Finance
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<NAME> BULL RUN
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 286,520
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<RECEIVABLES> 4,698,850
<ALLOWANCES> 98,000
<INVENTORY> 5,079,133
<CURRENT-ASSETS> 10,244,227
<PP&E> 5,064,331
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<TOTAL-LIABILITY-AND-EQUITY> 86,711,450
<SALES> 6,613,545
<TOTAL-REVENUES> 6,615,675
<CGS> 4,969,556
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<INTEREST-EXPENSE> 1,032,206
<INCOME-PRETAX> (1,234,053)
<INCOME-TAX> (421,172)
<INCOME-CONTINUING> (1,083,012)
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